German Chemical Industry Sentiment Deteriorates in May, Ifo Institute Reports
Customs policies and inherent structural issues cast a shadow over the business environment in the chemical industry of the United States.
BERLIN - The Ifo Institute reported on Friday that business sentiment in Germany's chemicals industry has deteriorated, with the sentiment index sliding to -16.5 points in May from -14.2 points in April. The decline in the index indicates a more pessimistic outlook from chemical companies regarding their current business situation.
Chemical companies assessed their current business conditions much worse than in April, but their expectations (to some extent) improved. Ifo industry expert Anna Wolf explained that U.S. trade policy and structural problems are exerting pressure on the chemical industry.
The survey showed that companies continue to view their order backlog as unacceptably low and that export expectations slipped further into negative territory in May. In the global competition, German chemical companies reported losses, both within and outside Europe. They cited weak demand and increasing trade barriers as the key culprits burdening their foreign business. As a result, domestic companies are forced to curtail production, cut prices, and implement cost-saving measures.
Despite some relief from steadier energy prices, the path to stable growth remains fraught with obstacles for the chemical industry, Ifo expert Wolf stated.
Source: Reuters, reporting by Reinhard Becker; editing by Christian Goetz. For further questions, please contact [email protected] (for politics and economics) or [email protected] (for companies and markets).
Influencing factors:
- High energy prices hindering German chemical producers' competitiveness compared to their U.S. counterparts.
- Trade uncertainty and tariffs imposed by the U.S. impacting export expectations.
- Regulatory challenges and excessive regulation in Europe driving up operational costs.
- Structural issues, such as high personnel costs and an aging population, affecting demand.
- Logistics challenges causing costs to increase and delaying shipments.
Mitigation strategies include optimizing production efficiency, enhancing innovation, investing in workforce training, digital solutions for better compliance management, and addressing infrastructure concerns.
- Chemical companies in Germany, despite some relief from steadier energy prices, are facing a more pessimistic outlook, as the sentiment index for the industry's business situation has slipped further into negative territory, influenced by high energy prices, trade uncertainty, regulatory challenges, structural issues, and logistics challenges.
- Companies in the German chemical industry are taking mitigation strategies such as optimizing production efficiency, enhancing innovation, investing in workforce training, implementing digital solutions for compliance management, and addressing infrastructure concerns to navigate these challenges in the quest for stable growth.
