Management Report
11.3 Economic Outlook
Global economy
We expect the global economic recovery to continue in 2011. However, the pace of expansion is likely to be slower than in 2010. Many countries will retain expansionary monetary policies that will buoy their economies, while most countries’ fiscal policies are not expected to provide any further growth stimulus. Renewed tension on the financial markets and sharp rises in the prices of oil and raw materials could pose a risk to economic development in 2011. At the end of 2010, however, these downside risks appeared comparatively slight.
The emerging markets are again expected to greatly stimulate the economic recovery in 2011. We anticipate that growth rates in the emerging markets will decline in the coming months but generally remain at a high level. The major emerging economies, especially China, appear set to continue driving global economic growth in 2011. We expect that the economic recovery in the industrialized countries will continue at a slow pace overall, though with considerable differences from one country to another. The prospects for the U.S. economy brightened considerably around the turn of the year 2010/2011, although the anticipated economic expansion is unlikely to significantly improve the situation on the employment market for the time being. Growth perspectives for Japan are more moderate. The eurozone economy in 2011 is likely to remain weighed down by the debt crisis in some countries. We therefore foresee only moderate growth overall. In the more dynamically performing E.U. countries – especially Germany – the economy should strengthen due to a recovery in domestic demand. In other eurozone countries, however, the consolidation measures triggered by public debt crises will continue to markedly dampen domestic demand.
HealthCare
We expect the growth rate for the pharmaceutical market in 2011 to be in the mid-single digits. This expansion is likely to be driven increasingly by countries such as China, Brazil, Mexico, South Korea, India and Russia. However, we foresee only low-single-digit growth rates in the traditional markets such as the United States and the major European countries due to patent expirations for major products of various pharmaceutical companies, a decline in new product launches and the increasing cost pressure being exerted by health organizations.
In 2011 we expect the consumer care market to grow more rapidly than in 2010 as a result of greater market penetration in eastern Europe and North America. The diabetes care market will probably see only very slight growth in 2011 due to continuing pressure on prices in the United States. We expect the animal health market, on the other hand, to again grow at an above-average rate in 2011.
CropScience
We foresee a positive trend for the global seed and crop protection market in 2011. Assuming normal weather patterns, we anticipate robust market growth for agrochemicals as well as for seed and traits. This growth is likely to come mainly from higher volumes.
Despite the fluctuations in global agricultural markets, the substantially higher prices for agricultural raw materials mean we are now operating in an increasingly conducive market environment. Given the limited availability of arable land, this is mainly due to steadily rising demand for food and feed products and plant-based energy raw materials.
The positive overall conditions are likely to stimulate demand for high-quality seed and thus for crop protection products, and spur farmers toward more intensive production.
In regional terms, we expect the largest growth stimulus to come from Latin America, where soybean cultivation in particular should further increase compared with 2010. Crop production is also expected to increase in the Asia/Pacific region. This applies particularly to rice, cereals and cotton, and also to specialty crops such as fruit and vegetables. By contrast, we again see only limited potential for market growth in the industrialized regions of the northern hemisphere in 2011.
MaterialScience
For 2011 MaterialScience expects a further strengthening of its main customer industries worldwide. We will focus particularly on the rapidly expanding markets of Asia, such as China and India. At the same time, we are counting on an ongoing recovery in demand in North America and Europe.
The automotive industry will remain on a path of recovery. New car sales in 2011 are likely to exceed 60 million – an all-time high. In nearly all markets except western Europe, demand and production are expected to increase considerably faster than experts predicted just a few months ago. China will remain the most important production base worldwide, with automakers planning to step up capacities again in 2012 to 17 million vehicles – more than are made in the entire European Union.
We anticipate robust expansion in the global electrical/electronics industry, where China and India will remain the principal growth drivers in 2011. The industrialized countries will also continue to benefit from the global economic recovery, however, carrying some of the many orders remaining from 2010 into 2011.
We predict a distinct recovery in the construction industry in 2011. Continuing strong growth in the emerging markets, coupled with a return to positive growth rates in mature markets such as Europe and North America, will likely lead to a gratifying global trend overall.
We believe that the market for the furniture industry will continue to brighten as it already did in 2010. The major growth regions in Asia will probably show a positive trend once again, benefiting not only from rising domestic demand, but also from an increasing recovery in global consumption. In the emerging markets of eastern Europe, the Middle East and Latin America, too, an upward trend in incomes should open up added sales potential for the furniture industry.