The business climate in the chemical industry suffered a marked deterioration in April. According to the Ifo Institute, the business climate index dropped to -29.0 points, a decline from -25.1 points reported in March. This marks the lowest reading recorded in nearly three years.
While companies improved their assessment of their current business situation-now rated at -27.1 points, compared to -31.2 points in March-future expectations plummeted, falling from -18.6 points to -30.9 points.
Ifo sector expert Anna Wolf noted that despite some positive developments in day-to-day operations, the chemical sector views its future with extreme pessimism. The industry is grappling with global supply chain disruptions, exemplified by the turmoil stemming from the Iran crisis. This has created a paradoxical scenario: companies report an increase in incoming orders as customers switch to domestically produced goods, yet simultaneously, one in three companies struggle with insufficient materials. Furthermore, chemical prices continue to climb, leading to expectations of further cost increases.
However, companies regard this rising demand as temporary. For the coming months, they plan to scale back production, and employment forecasts remain cautious. Wolf concluded that the weak business performance observed in April is primarily a reflection of disrupted supply chains rather than evidence of a sustainable economic recovery.
