By Chase Gummer
FRANKFURT--German Chemical Industry Association VCI on Tuesday
cut its forecast for the year, as weak domestic demand and
increasing geopolitical tensions led to a drop in chemical
production in the second quarter compared with the first
quarter.
In the second-quarter, chemical and pharmaceuticals production
in Germany sank 2.3% on the quarter, but rose 0.3% on the year, as
German chemical producers decided to restrict production because of
geopolitical risk.
Domestic sales of chemicals and pharmaceuticals fell 2.8% on the
quarter, while exports were down 0.9% over the same period. Total
sales dropped 1.2% on the quarter, leaving sales flat on the
year.
For the full year, the association expects chemical production
to rise 1.5% compared with its previous forecast of a 2% rise.
Sales are expected to rise 1% to EUR192.5 billion, down from the
previous forecast of a 1.5% rise.
"We expect a modest recovery in demand in the second half of the
year, if the geopolitical situation doesn't deteriorate further,"
VCI President Karl Ludwig Kley said in a statement.
The association cited falling gross domestic product growth in
core European Union countries such as France, Italy, and Germany
for the decline in production, while economies on the periphery
such as Spain, Portugal and Greece fared better.