Forecast, Opportunities and Risks

Economic Outlook

Global Economy

For the current fiscal year, we expect global economic output to rise slightly more strongly – now by 2.5% – 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 has been more positive in the year to date than previously expected, and this has had a boosting effect on global economic growth expected in the year 2023. However, there are signs that tighter monetary policy in response to high inflation in the United States and Europe will weigh significantly on economic performance during the remainder of the year. As a consequence, the United States is expected to move into a mild technical recession while Europe’s poor economic performance will likely continue. Despite a modest increase in economic growth expected in China compared with the outlook published in the Annual Report 2022, demand remains at a low level and weak demand for exports does not prompt expectations of positive effects on global economic growth. The economic stimulus measures implemented in China are aimed at stabilizing the economy and have so far only had limited success in countering the negative growth trends.

The economic growth forecast for the EMLA and NA regions continues to be below the global growth rate. As referred to above, economic growth in the year to date 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 1.2% in the EMLA region and by 2.0% in the NA region.

In the APAC region, we now expect growth to exceed global economic expansion, at 4.1%. Although the recovery of macroeconomic performance in China is slowing down due to weak consumption, we expect economic output to rise more strongly for the year as a whole than indicated in the outlook published in the Annual Report 2022.

Main Customer Industries

The fact that the rise in global economic output has been stronger than communicated in the outlook published in the Annual Report 2022 is largely due to the robust performance of the services sector. This is, however, not reflected in all of Covestro’s main customer industries. In particular, slightly negative growth is now expected for the construction industry and significantly negative growth for the furniture industry in the year 2023. For the electrical, electronics, and household appliances industry, we are also anticipating that growth will be down on the outlook presented in the Annual Report 2022. In contrast, we expect considerable growth for the automotive industry in the year 2023 at a faster rate than indicated in the outlook published in the Annual Report 2022.