Report on Future Perspectives and on Opportunities and Risks

Economic Outlook

Global Economy

For the current fiscal year, we expect global economic output to rise slightly more strongly – now by 2.4% – than indicated in the outlook published in the Annual Report 2022. Backed by the robust performance of the services sector, the economic data for the leading industrialized countries was more positive in the first half of the year than previously expected, and this has had a boosting effect on global economic growth in the year 2023. However, there are signs that tighter monetary policy in response to inflation in the United States and Europe will weigh significantly on economic performance during the remainder of the year. It is therefore to be anticipated that the United States will enter a mild recession. The pace of growth is expected to slow in the United States and Europe, especially in the manufacturing industry. The recovery initiated by the relaxation of China’s zero-COVID policy in the year 2022 is slowing noticeably, so that only limited positive momentum for global economic growth can now be expected in the second half of 2023.

The economic growth forecast for the EMLA and NA regions continues to be below the global growth rate. As referred to above, global economic growth in the first half of the year in particular has had a positive impact on expected full-year economic growth in both regions, compared with the outlook published in the Annual Report 2022. We now forecast that the economy will expand by 1.1% in the EMLA region and by 1.7% in the NA region.

In the APAC region, we expect growth of 4.1%, in excess of global economic expansion. Although the recovery of macroeconomic performance in China is slowing down, we are still anticipating that – driven by economic stimulus measures – economic performance will increase faster than suggested in the outlook published in the Annual Report 2022.

Main Customer Industries

Compared with the outlook presented in the Annual Report 2022, growth expectations are significantly lower for all sectors, except the automotive industry. The stronger rise in global economic output than indicated in the outlook published in the Annual Report 2022 is largely due to the robust performance of the services sector and not reflected in the performance of the industries relevant to Covestro. For the automotive industry, we anticipate significant growth in the year 2023. We now expect stagnant growth in the electrical, electronics, and household appliances industry. In contrast, the latest expectations for the construction and furniture industry are for slightly negative growth in the year 2023.