FRANKFURT, Nov 11: Production in Germany's chemical sector is languishing at a three-decade low, an industry group said Tuesday, warning that government efforts to revive the wider economy were going nowhere.
Chemicals counts among the top industrial sectors in Europe's biggest economy, which is home to titans like BASF and Bayer, and is seen as a bellwether for the health of the broader economy.
But the industry has long been complaining of problems ranging from high energy costs to onerous European regulations and fierce competition from cheaper foreign producers.
The sector was still "struggling on all fronts," said Wolfgang Grosse Entrup, head of the VCI association, which represents the chemical and pharmaceutical industries.
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"Production, sales, prices... everything is in the red."
Chemical production in the third quarter of the the year was down 4.3 percent compared to a year earlier, according to the VCI, with Grosse Entrup saying that it was around levels seen in 1995.
Only around 70 percent of chemical plant capacity was being used, while quarterly sales to the United States were down about 20 percent and to Asia about 12 percent from a year earlier, the group said.
The pharmaceutical sector is faring better, with production up from a year earlier, but confidence was also suffering due in part to volatile US tariff policy, said the VCI.
The government of Chancellor Friedrich Merz, which took power in May, "has unfortunately still not managed to generate a spirit of optimism in industry," Grosse Entrup told a press conference.
"The economy is still stagnating. There is a lack of a convincing strategy that can restore confidence and get Germany back on track."
It is the latest sign that German industry is growing impatient as the economy continues to tread water after two years of recession, despite pledges from Merz to spark a rebound.
Meanwhile investor morale in November fell slightly, despite expectations for a slight increase, according to a survey from the ZEW institute.
It showed that market expectations for the economy dipped to 38.5 points, from 39.3 a month earlier.
"The overall mood is characterised by a fall in confidence in the capacity of Germany's economic policy to tackle the pressing issues," said ZEW president Achim Wambach.
