Report on Economic Position

Economic Environment

Global Economy

In the year 2023, the global economy expanded slightly, by 2.7%, and therefore more slowly than in the previous year, with all regions recording positive growth rates. One of the growth drivers was the robust performance of the services sector in leading industrialized countries. Geopolitical events, such as the escalation in the Middle East and the resulting difficulties in the supply chains, the Russian war against Ukraine, and continuing tensions between the United States and China, again weighed on global economic performance this year. In the NA region, strong consumer spending, especially in the United States, contributed to slight economic growth above the prior-year level, and a technical recession was avoided despite significantly tighter monetary policy. In the APAC region, particularly economic stimulus measures implemented by the Chinese government had a stabilizing effect, resulting in considerable economic growth at a faster rate than in the previous year. In the EMLA region, the economy also expanded slightly, but at a slower rate than in the other regions and in the prior year.

Main Customer Industries

As described above, the positive global economic growth recorded in the year 2023 was mainly driven by the robust performance in the services sector, although this is not reflected in all of Covestro’s main customer industries.

At 10.2%, the global automotive industry grew faster in fiscal 2023 than in the previous year. Order backlogs protected the industry from the downturn in the reporting year. The APAC and NA regions recorded significant positive growth, while growth in the EMLA region was slightly positive.

In the year 2023, the global construction industry saw a negative growth rate of 2.4% and therefore lower growth than in the previous year. Rising interest rates and the high cost of building materials due to material and labor shortages continued to have a negative effect in the reporting year, leading to a slight decline of the construction industry in all regions.

In the year 2023, the growth rate in the electrical, electronics and household appliances industry was negative at 0.9% and therefore similar to the previous year. Due to continuing shifts in consumer spending from goods to services, there was weak demand for electronics and electrical components in fiscal 2023. The APAC and NA regions generated modestly positive growth in the reporting year, while there was a slight decline in the EMLA region.

In the year 2023, the global furniture industry saw negative growth of 3.7%, marking another decrease from the previous year. High inflation, rising selling prices, a slowdown in consumer demand, and lower investments in the housing sector led to a downturn in demand for furniture and significantly negative growth rates in fiscal 2023 especially in the NA and EMLA regions; performance in the APAC region was stable.