German Chemical Industry Sees Slowed Recovery in Q2: Production Up Only 0.8%, Pharmaceutical Output Down 4%!

According to a report released by the German Industry Association (VCI) on Tuesday, the recovery of the German chemical industry slowed in the second quarter. Specifically, in the period from April to June, orders in and outside Germany showed signs of slowing growth, with the pharmaceutical sector in particular being significantly affected. Wolfgang Grosse Entrup, executive director of VCI, noted in the press release that the global economy has not accelerated as expected. He further stressed that Germany's structural problems, such as high production costs, complex administrative processes and labor shortages, have not been effectively addressed.

According to the report, the total output of the chemical industry in the second quarter increased by only 0.8 percent quarter-on-quarter, which is a significant slowdown from the 5 percent quarterly growth in the first quarter. Due to weak demand due to high production costs and high inflation, the German chemical industry is facing serious challenges throughout 2023. Although Europe's largest chemical producer showed early signs of recovery in the first quarter of this year, that recovery now appears to be waning.

In terms of drug production, it was down 4% compared to the previous quarter. Still, overall production increased by 3.7% compared to the same period last year. Excluding drugs, the increase was 8.4 percent. Worryingly, however, revenue fell 0.6 per cent year on year.

Despite the multiple challenges, the German chemical industry maintained its annual target of 3.5% growth in production, including pharmaceuticals, and 1.5% growth in industrial sales. This shows that the industry as a whole is still struggling to maintain its growth momentum, even though the recovery has waned.