Global economy weakens significantly
The financial crisis that was triggered in summer 2007 by the problems in the U.S. housing market resulted in recessionary trends in the global economy in 2008. In many countries, these led to weak demand in industrial production sectors and were reflected in real gross national product (GNP) of the last two quarters of 2008. While 2007 was still marked by global GNP growth of 5%, this value declined to 3.7% in 2008 according to the International Monetary Fund (IMF). The German Council of Economic Experts registered global economic growth of 2.8% in 2008. The Organization for Economic Cooperation and Development (OECD) reported a 1.4% increase in GNP for its 30 members in 2008.
According to the IMF, raw material prices, which fell in the second half of 2008, reflect the global economic downturn, the strengthening of the dollar and the financial crisis.
In addition, during the second half of 2008, consumer confidence fell, leading to declining consumption and postponed investments, and thus lower product volumes.
While the United States saw a 2.0% increase in GNP in 2007, this number decreased to 1.4% in 2008. In the euro zone, GNP grew by 2.6% in 2007 and, according to the IMF and Eurostat, by 1.2% in 2008. Major European economies such as Germany, France, Italy and Spain all registered a decline in GNP growth in 2008. GNP growth in Germany declined from 2.5% in 2007 to 1.3% in 2008 and fell continuously as of the second quarter. According to OECD statistics, France saw a decline in GNP growth from 2.2% in 2007 to 0.8% in 2008 and Italy saw GNP growth decline from +1.5% in 2007 to –0.2% in 2008.
Even high-growth nations such as China, Russia and India could not escape the global trend completely. Initially, however, they were only slightly affected by the turmoil in the financial markets and the global economic weakness. China’s double-digit growth of 12% in 2007 declined to 9.7% in 2008, according to IMF data. This was the first time in five years that the Chinese economy had posted single-digit growth.
Russia was not only affected by the global trend toward economic weakness but also suffered from capital outflows due to the conflict in Georgia. According to data from the German Council of Economic Experts, Russian GNP growth declined from 8.1% in 2007 to 7% in 2008. The OECD and the World Bank assume even lower growth rates.
According to the IMF, India recorded a 7.8% increase in GNP in 2008 following an increase of 9.3% in 2007.
The Japanese economy grew by only 0.5% in 2008 following an increase of 2.1% in the previous year, according to IMF data.
Global pharmaceutical markets see moderate growth
According to data from the market research institute IMS Health, the global pharmaceutical market grew between 4.5% and 5.5% to a volume of US$ 780 billion in 2008.
According to IMS figures, the United States, the world’s largest pharmaceutical market, grew by 1% to US$ 208 billion. The weaker growth is attributed to lower demand for newly approved products as well as the economic climate, which is possibly impacting the prescribing practices of physicians.
For Japan, the world’s second-largest pharmaceutical market, IMS Health reported growth of 4% to US$ 66 billion, followed by Germany, where market volume increased by 4% to US$ 36 billion. In France, the world’s fourth-largest market, drug sales increased by 1% to US$ 31 billion in 2008.
Chemical markets suffer from economic downturn
The European chemical industry association CEFIC, which represents around 50% of all global chemical companies, says that production of chemicals including pharmaceutical active ingredients by its member companies increased by 0.2% in 2008. In the United States, chemical production, including drugs, decreased by 1.1%. Excluding the production of pharmaceutical products, CEFIC reported an 0.6% decline in European chemicals production. According to CEFIC data, in the United States, the decline amounted to 2.4% in 2008. Specialty chemical manufacturers cut their output by 1.3% in 2008. Production of chemicals used by consumers fell by 1.4% in 2008.
The German Chemical Industry Association VCI assumes stagnating production and sales growth of 3% to € 179 billion in 2008. According to the VCI, chemical production had already begun to decline in the second half as the financial crisis impacted an increasing number of customer segments within the chemical industry. The VCI primarily named the automotive and the construction industries as sectors that experienced declining demand.
According to the International Council of Chemical Associations (ICCA), more than 7 million people work in the chemical industry. Including industrial sectors that indirectly depend on the chemical industry, more than 20 million people work in the chemical industry. Global sales are around € 2 trillion, with the largest market being Asia followed by Europe.
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