Economic Environment¹

Global economic growth in 2024 was again driven more by services than the production of goods. Declining inflation and the interest rate turnaround initiated by many central banks supported demand. Starting from a low base, the global chemical industry grew at a faster pace than the overall industrial production. However, growth in the chemical industry weakened over the course of the year, particularly in Europe (see Forecast).

Global gross domestic product (GDP) grew by 2.7% compared with the previous year (2023: +2.8%). Global industrial production only rose by 2.1% (2023: +1.5%). Starting from a low base after two weak years, global chemical production grew by 3.9%, albeit with significant regional differences. While the chemical industry increased by 6.8% in China, it only grew by 1.1% in the rest of the world.

The average price of Brent crude oil remained around the prior-year level at $81 per barrel (previous year: $82 per barrel). The annual average gas price in northwestern Europe was €34.17 per MWh or $10.83 per mmBtu (previous year: €40.52 per MWh or $12.83 per mmBtu), almost five times higher than in the United States (€6.93 per MWh or $2.20 per mmBtu).

Trends in the global economy in 2024

At 0.9%, GDP growth in the European Union (EU) was only slightly above the previous year’s very weak level. Industrial production contracted for the second consecutive year.

Within the EU, there were significant differences in growth between member states. Spain’s GDP grew by around 3%, primarily due to its higher share of tourism and services. On the other hand, France and Italy saw only marginal economic expansion mainly due to persistently weak private consumption.

The German economy stagnated again in 2024 due to slow private consumption despite rising incomes and a decline in capital investment. In view of the weakness in Germany’s core industries, foreign trade did not provide positive momentum. Overall, the German economy has not grown in real terms since 2019, while GDP in the rest of the eurozone increased by 6% in this period.

At nearly 2%, growth in the eastern EU countries was also above the EU average. However, there were also considerable differences within this region. Poland’s economy showed relatively strong growth of almost 3% due to the provision of previously frozen EU funds and rising real incomes. In Hungary and Czechia, GDP growth rates did not differ significantly from the low EU average as their industrial sectors heavily rely on western Europe.

In the United Kingdom, GDP growth remained weak, reflecting the only slight increase in consumer spending and volatile contributions from investment and foreign trade.

In contrast to Europe, the United States recorded continued robust GDP growth of 2.8%. Private consumption continued to rise due to strong labor market demand and higher real wages, although service consumption still accounted for more than two-thirds of this growth. Capital expenditures also contributed to the solid growth, while the increase in the foreign trade deficit dampened expansion. The contribution from commercial construction investment in 2024 was considerably lower than in the prior-year period. The industrial economy in the United States remained weak, with the manufacturing sector in particular stagnating over the year as a whole.

In China, the GDP growth rate reached the official target of 5%. Even though private consumption rose at a similar rate, domestic demand for goods only grew at a subdued pace. In contrast, the export of goods provided considerable growth momentum for the industry. In this environment, industrial production in China rose by around 5%. While the manufacturing sector with an expansion of around 6% slightly outpaced the industry as a whole, the ongoing crisis in residential construction had a dampening effect on the overall industrial growth rate.

India was the fastest-growing major economy in 2024 with growth of more than 6%. This was supported by the robust increase in private consumption and rise in investments. In the ASEAN countries, which benefited from the diversification of international industrial value chains, GDP also grew relatively strongly at just under 5%. This was especially the case in Indonesia, the Philippines and Vietnam, all of which achieved growth of around 5% or higher. Growth in mature Asian markets lagged behind emerging markets in the region. In South Korea, economic growth was around 2%. In Japan, GDP stagnated, partly due to the lack of growth in private consumer demand and investments, and the sharp decline in automotive production.

Brazil, South America’s largest economy, recorded solid growth of almost 3.3%. Both private consumer demand and investments saw a significant increase – by more than 5% and more than 7% respectively. Industrial production outpaced GDP slightly, while the agricultural sector suffered as a result of the floods in southern Brazil. Despite the improved economic outlook following recent reforms, Argentina’s GDP contracted by around 3% in 2024. Overall, GDP in South America increased by 2.0%, slightly more than in the previous year.