(Reuters) – Germany’s chemicals association VCI cut its annual outlook on Wednesday, as it expects 2025 to be further impacted by geopolitical headwinds and the weak economic environment.
The industry lobby now expects production to stagnate in 2025, after previously projecting 0.5% growth, with the pharmaceutical industry compensating for a decrease in the chemical industry, it said.
It also expects sales and producer prices to decline by 1% this year.
In December, it had said 2025 sales would stagnate.
The German chemical sector, the country’s third largest industry, has been struggling for years with subdued demand coupled with high energy costs, supply chain issues and an overall struggling economy.
VCI, which represents around 1,900 companies, said hints of an economic recovery outside of Europe were offset by continuous geopolitical political headwinds and declining competitiveness in Germany.
Looming U.S.
tariffs and China’s focus on becoming less dependent on imports further cuts down hopes for the industry to rely on international customers for a recovery, it added.
“(U.S. President) Donald Trump’s unpredictable customs policy, a renewed rise in energy prices and unresolved structural problems continue to cause uncertainty,” VCI General Manager Wolfgang Große Entrup said in a statement.
Taking these factors into account, VCI does not expect Germany’s chemical sector to recover before 2026, it said.
(Reporting by Isabel Demetz and Bartosz Dabrowski in Gdansk, Patricia Weiß in Frankfurt; editing by Milla Nissi)
