UK chemical sector growth, including pharmaceuticals, is forecast at 3.6 per cent for 2004, outperforming the 2.3 per cent growth estimated for Europe as a whole, according to a study presented at the Chemical Industry Association's Business Outlook meeting in London yesterday.
David Thomas, head of international industry consulting at Oxford Economic Forecasting, said that while UK sector growth is expected to fall back slightly to 3.5 per cent in 2005, these figures represent a big increase on the 0.7 per cent growth in 2003.
There are also some signs of relief for the hard-pressed European pharmachem industry, with a number of companies in the midst of major restructuring and making swingeing job cuts. Europe will see better chemicals growth in 2005 with growth forecast at 3.4 per cent, due mainly to improved growth in Germany and France, which will only see growth of 0.7 per cent and 2.2 per cent, respectively in 2004.
David Thomas noted that the key areas of risk for Europe in his forecast will be the effects of EU regulation, a stronger euro, continued investment flight to the developing world, further restocking and the general economic recovery.
However, Europe will lag behind the US and Asia in terms of economic recovery in 2004, he suggested, and will peak later. Gross Domestic Products (GDP) will grow by 1.9 per cent in Europe compared with 4.6 per cent in the US and 6.4 per cent in Asia, excluding Japan.
Within Europe, amongst the four biggest economies the UK is expected to see the highest growth in GDP, 2.9 per cent compared with 1.3 per cent for Germany, 1.5 per cent for France and Italy. The best performer he suggested, will be Spain with a 3.1 per cent hike. Overall world GDP growth is forecast at 3.5 per cent.
US bounces back
Meanwhile, the US chemicals sector is expected to see 3.6 per cent growth in 2004, after a period , falling back to 3.1 per cent in 2005. Thomas also sees Japan's slow chemicals recovery, with 1.4 per cent growth in 2003 and a forecast 1.8 per cent in 2004, gathering momentum in 2005 to reach a similar growth rate to the US.