A new study from IHS inc. has said that as Western Europe returns to growth, the automotive, renewable energy and technology industries are offering billion dollar opportunities.
Nariman Behravesh, IHS, chief economist said, "the developed economies are pushing growth back to the Eurozone. But, Germany’s star will rise faster and higher than the rest in the next three years. Domestic strength due to structural labour market conditions, expansionary monetary and fiscal policy as well as rising domestic demand all underpin Germany’s economic growth. Germany does face some serious competitive challenges in the medium to long term because of rising energy costs and poor productivity growth."
The chemical industry
The chemical industry in Germany has a slightly more optimistic outlook than the rest of Europe. John Page, vice president, consulting, IHS, said, "even though growth is expected to occur at a slow pace, German producers are more optimistic than others in Europe. This optimism is largely because the German economy is one of the strongest economies in the region, the country has a much larger and more robust manufacturing base than the rest of Europe, and their facilities are more up to date from a technology standpoint than the rest of Europe. Most companies expect the German chemical business to pick up in the coming months, also in part due to increasing domestic demand."
Over recent years, the European chemical industry has seen a gradual change in fortune, with growing costs and a competitive market with many players. Faced with uncompetitive energy prices and stagnating demand, European chemical companies are going to have to adapt quickly or suffer the consequences.
2030 EU energy and climate policy targets
The ambitious 2030 EU targets of 40% greenhouse gas (GHG) reduction requires continued investment in renewables and a fundamental transformation of the European energy sector amid rising concerns over subsidy costs and competitiveness. By 2030, renewable capacity in Europe is expected to grow by 297 Gw led by the UK and Germany.
The shale revolution has however shifted the global context for European energy policy, with low US energy prices adding further pressure to reduce costs within the European decarbonisation process. Technology improvements and changes in policy and market design are necessary to support the build out and integration of renewables in a cost effective manner in Europe as the decarbonisation policy has resulted in rising energy prices for end consumers.
Key report findings
- IHS Economics: The gap between Germany and the rest of Western Europe is growing; France is struggling to keep up.
- IHS Chemical: German and European chemical producers expect marginal growth in 2014; German producers slightly optimistic about outlook, but European chemical companies must adapt quickly to be competitive.
- IHS Energy: The European energy sector is experiencing a transformational shift driven by EU energy and climate policy; Renewable capacity to grow fastest in the UK.
- IHS Automotive: Europe will overtake North American sales to be the second largest light vehicle market in the world before 2020; Germany will be Europe’s largest automotive market for next five years.
- IHS Technology: Western Europe will invest 30 billion euros in next generation broadband to tap into future economic and social benefits.
- IHS Defence: NATO will account for less than half of all defence spending by 2020 as Russia’s defence budget triples in three years.
Adapted from a press release by Claira Lloyd.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/15052014/western_europe_economic_growth_ihs_525/