Economic Outlook

Global Economy

Compared with the outlook given in the Annual Report 2023, we expect a slight improvement in global economic growth to 2.6% in fiscal 2024. Despite the continuing reluctance to take economic stimulus measures and the restrictive monetary policy, which have a detrimental impact on consumption and industries sensitive to interest rates, we expect a moderate, but positive growth momentum. We anticipate that monetary policy will be gradually relaxed in the second half of 2024, as inflation expectations stabilize.

We forecast that, at 1.4%, the EMLA region’s economic growth will be slower than that of the global economy in the year 2024. Compared with the outlook published in the Annual Report 2023, the forecast has, however, been adjusted slightly upward. A number of economic indicators continue to point to a gradual recovery for the year 2024, driven by rising private consumption, despite continuing inflationary pressures.

For the NA region, we project expansion of 2.2% in fiscal 2024, slightly lower than the outlook for the global economy. The growth expectations for this region have also improved slightly from the outlook presented in the Annual Report 2023. Despite mixed signals from the labor market, the risk of recession is considered low. As wage growth and rentals cool, inflation data is expected to improve in the second half of 2024.

For the APAC region, we anticipate growth of 3.9% – faster global economic expansion – in the year 2024. This projection is therefore slightly better than the outlook published in the Annual Report 2023. China’s above-average production output at the beginning of this year is set to continue into the second half of 2024, with support expected from a stable export situation and economic stimulus measures.

¹ Real growth of gross domestic product; source: Oxford Economics, “Growth 2023” and “Growth forecast 2024” as of July 2024.

² Latin America (excluding Mexico).

³ North America (Canada, Mexico, United States).

Main Customer Industries

The growth expectations for the construction, and furniture industries are largely the same or slightly better than the outlook presented in the Annual Report 2023.

We now expect growth of 0.3% for the global automotive industry. The decline compared to the original forecast is driven by weaker demand for electric vehicles.

We anticipate that the global construction industry will see negative growth of 2.2% in the year 2024, which is still attributable to high interest rates and material costs.

For the electrical, electronics and household appliances industry, we are now forecasting growth of 3.4%, driven by the bounce-back of the computer and office equipment segment.

We anticipate that the furniture industry will edge up by 0.1% in the year 2024. The macroeconomic conditions have not changed from the previous forecast.

¹ Covestro’s estimate, based on the following sources: GlobalData Plc, B+L, CSIL (Centre for Industrial Studies), Oxford Economics. We limit the economic data of our “automotive and transportation” and “furniture and wood processing” main customer industries to the automotive and furniture segments (excluding the transportation or wood processing segments). As of: July 2024.