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The worldwide economic recovery is expected to continue in 2010. However, the impact of the global business downturn in 2009 will continue to be felt for some time to come, making it unlikely that the global economy will return to its pre-crisis condition in 2010.
The economic perspectives for 2010 are marked by considerable uncertainty. The risks jeopardizing the prospects for a sustained upswing remain in place for the time being, with investor and consumer reticence likely to continue initially in 2010 in view of global overcapacities and continuing problems on the international financial markets. In addition, the effects of fiscal stimulus measures will come to an end in most industry sectors. As a result, economic growth in both Europe and the United States will probably be only modest at first. By contrast, a stronger recovery is likely in the emerging markets, particularly those of Asia and Latin America. For 2010 as a whole we expect to see a moderate expansion of the world economy.
HealthCare
We expect growth in the pharmaceutical market in 2010 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 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 increasing cost pressure being exerted by health organizations. The overall economic environment is unlikely to provide significant growth stimuli for the pharmaceutical market.
We expect the global consumer health market to continue growing moderately in 2010, bolstered by a slight improvement in economic conditions in western Europe and North America compared with 2009.
CropScience
We believe the seed and crop protection market as a whole will recover in 2010. Although prices for agricultural crop commodities and energy are still expected to fluctuate and uncertainty in the financial markets will persist, agricultural activity is likely to intensify. This is mainly because of long-term factors shaping world agriculture markets, such as steadily rising demand for food and feed products and a shortage of arable land.
Assuming normal weather conditions, we expect currency-adjusted world market growth of approximately 3% for agrochemicals and over 5% for high-quality seeds and plant traits in 2010. We believe this growth will result from both rising prices and positive volume effects. Compared to the very strong first quarter of 2009, we anticipate market shrinkage initially, followed by a recovery over the course of the year. In regional terms, we expect the largest growth stimulus to come from Latin America, where soybean cultivation in particular should increase considerably compared with 2009. Crop production is also expected to increase in the Asia/Pacific region. This applies particularly to rice and cereals, and also to specialty crops such as fruit and vegetables. As far as the industrialized countries are concerned, however, we predict stagnation in western European crop protection markets in 2010, with slight declines possible in North America.
MaterialScience
Growth expectations for 2010 in the main customer industries of MaterialScience are moderately optimistic. The extent of the economic recovery will depend mainly on a sustained increase in demand in North America and Europe and continued growth in Asia.
The automotive industry will probably experience strong regional variations in 2010. Western Europe could be hardest hit by the slump in volumes, as unit sales in 2009 were propped up in all major vehicle-producing countries by massive stimulus programs and demand for automobiles may therefore be partially saturated. In North America, a recovery is expected in 2010 following an extremely weak year. However, we do not expect production to return to pre-crisis levels in the foreseeable future. Asia – led by China – will probably remain the growth engine for the automotive industry. There the government stimulus programs are continuing and are targeted very much toward boosting Chinese output.
The electrical and electronics industry should emerge quickly from the crisis thanks to the variety of segments it includes. Factors making robust growth likely in the coming years include the continuing high demand for modern infrastructure, particularly in the emerging markets, the highly competitive innovation climate in the industry, the challenges presented by climate change and the expansion of regenerative energies.
We expect a slight recovery in the global construction industry in 2010, partly because of the massive government stimulus programs. Continuing robust development in China and India and an improvement in eastern Europe should support a return to positive growth rates. By contrast, we predict a hesitant recovery in building investment in western Europe, North America and Japan.
We believe that the furniture industry will stabilize increasingly during 2010 following a phase of market shrinkage in 2009. However, many of the countries heavily impacted by the economic crisis will probably see only low rates of growth. The industry is likely to benefit from a sustained market rebound in subsequent years. The emerging economies of Asia, eastern Europe and Latin America should harbor development potential.
