FRANKFURT AM MAIN: Germany's powerful chemical industry federation on Tuesday slashed its outlook for 2019, saying a slowing European economy and threats from further afield would drag on performance.
"The mood in the sector has recently clouded over significantly," said Utz Tillmann, director of the Federation of the Chemical Industry (VCI), reports AFP."Industry in Germany and Europe is in a downturn. Important client industries are throttling production" including the vital car sector, still hobbled by tough new emissions tests introduced in September, Tillmann said.
The VCI forecasts a 3.5-percent fall in production for 2019 and a 2.5-percent slip in revenues, to 198.5 billion euros ($223.9 billion).
At its last quarterly update in December, the VCI had forecast "modest growth" for 2019, with a 1.5 percent lift to production and 2.5 percent higher sales.
Representing Germany's third-largest industrial sector, the VCI gathers around 1,700 firms ranging from giant multinationals like BASF to tiny family companies, together employing over 460,000 people.
Many chemical makers stand upstream from manufacturers confronted with a slew of challenges.
Within the eurozone single currency bloc, heavyweight economy Italy is in recession amid fears over its public debt.Outside, Britain is on the brink of a disorderly exit from the European Union later this month, Washington's trade conflicts with Brussels and Beijing are rolling on and China's growth has slowed markedly.
Many of the threats to the German and European economy are far from new, and already proved to be a drag on chemical production and sales in 2018.
The VCI reported output volume rose 3.6 percent last year, while sales grew 4.1 percent to 203.5 billion euros.
But much of the increase was down to a one-off effect from production of a new "blockbuster" drug, VCI said, with production falling 2.2 percent when pharmaceuticals were ruled out.