Economic Outlook

Global Economy

Compared to the year 2023, we continue to forecast slower, but positive, global economic growth of 2.5% for fiscal 2024. We expect growth rates in all regions to be at similar levels to the outlook published in the Annual Report 2023. As part of this forecast, we consider the continuing reluctance to take economic stimulus measures and the still restrictive monetary policy to be key drivers of these moderate growth dynamics. The latter is expected to have an adverse effect on consumer spending and the development of industries sensitive to interest rates, such as the construction industry.

For the EMLA region, we anticipate growth of 1.2% and therefore below the global rate of expansion. Due to low consumer spending, high interest rates, and higher energy prices than in other regions, we expect the economy in the EMLA region to expand only modestly.

For the NA region, we project growth of 2.4%, virtually on a level with the global growth outlook. Persistently high consumer spending and the strong performance of the labor market are having a beneficial effect on economic expansion in the NA region. Based on the expectation of interest rate cuts in the second half of 2024, we anticipate that the investing activities of companies in interest-sensitive industries will also recover.

Economic growth in the APAC region will likely exceed the global growth rate. We anticipate economic growth of 3.8% for this region in fiscal 2024. For China, there are continuing signs of weak growth performance compared with the previous year for reasons that include the crisis in the real estate market and poor labor market prospects. In our forecast, we have assumed that the Chinese government’s measures intended to stimulate consumption, tax reductions, and supply-side support for the manufacturing industry will boost economic growth in the region.

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

² Latin America (excluding Mexico).

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

Main Customer Industries

Compared to the forecast given in the Annual Report 2023, growth expectations for the main customer industries, with the exception of the electrical, electronics and household appliances industry, largely remain unchanged.

We anticipate negative growth of 2.5% in the global construction industry. The sector continues to be impacted by the high cost of construction materials, persistent labor shortages, and high construction loan interest rates. Growth in the global automotive industry is expected to amount to 1.0%, in an environment of weak demand. We anticipate expansion of 0.1% in the global furniture industry in the year 2024. Limited economic expansion, low investments in the housing sector, and sluggish consumer demand will again have a dampening effect on growth prospects in the year 2024. For the electrical, electronics and household appliances industry, we are forecasting growth of 1.9%, and therefore slightly above the outlook given in the Annual Report 2023.

¹ Covestro’s estimate, based on the following sources: LMC Automotive Limited, B+L, CSIL (Centre for Industrial Studies), Oxford Economics. We limited 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: April 2024.