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The prospects for the global economy improved at the beginning of 2012, but remain uncertain. On the one hand, the recovery in the United States has stabilized and is likely to continue over the rest of the year. We also expect the emerging markets to continue their robust growth, albeit with somewhat reduced momentum in some countries, especially China. On the other hand, the outlook for Europe remains unfavorable. Investor and consumer reticence is likely in view of the uncertainty as to how the euro crisis will develop. In this environment, we also anticipate slower growth in Germany than in the previous year. In addition, raw material price increases could further hamper the global economy.
We continue to expect the growth rate for the pharmaceuticals market in 2012 to be in the mid-single digits. A major part of this growth will probably continue to take place in emerging markets such as China, Brazil, India and Russia. In the traditional markets such as the United States and the major European countries, we expect growth to be only in the low single digits. Slight declines are possible in some countries.
The consumer care market remains likely to expand at the same or a slightly lower rate than in 2011, with higher rates of growth in the emerging markets but slower expansion in Europe and the United States. We anticipate that the medical care market will grow somewhat faster in 2012 than in 2011 in light of a stronger market for medical devices. We expect the animal health market as a whole to continue expanding in 2012 at the rate of recent years despite the weaker economic prospects for the first half.
We anticipate that the global seed and crop protection market will continue to develop positively in 2012, albeit rather more slowly than in the preceding year. The continuing high prices for agricultural commodities are likely to stimulate growth, particularly in Asia/Pacific, Eastern Europe and Latin America.
We anticipate that the global markets of importance to MaterialScience will continue to grow in 2012, though perhaps more slowly, with Asia maintaining its economic growth momentum.
Global economy
The prospects for the global economy in 2012 remain uncertain despite positive signals in North America. This is especially due to doubts about the outcome of the euro crisis, which are likely to dampen investment activity. The high levels of private and public debt in many countries will probably also have a negative impact on demand. A significant increase in the oil price during the year would further weaken the economy. By contrast, the highly expansionary monetary policy is expected to continue supporting growth.
For the eurozone, we anticipate considerably slower expansion in 2012 than in 2011, and negative growth is likely in some countries. In this environment, the German economy has so far proven robust, with consumption buoyed especially by the positive trend on the employment market. This effect will probably continue for some time. However, given the importance of the other European countries for German exports, Germany is unlikely to be able to disconnect itself from the European economy in the long term. For this reason we expect the German economy, too, to grow less rapidly in 2012 than in the previous year.
In the United States a moderate recovery began to materialize toward the end of 2011, and the threat of a recession appears to have been averted for the time being. However, in view of the continuing tight employment market and the high level of government debt, we anticipate that the U.S. economy will remain fragile.
By contrast, the emerging markets are forecast to grow rapidly again in 2012. However, even these countries cannot be expected to escape the deterioration in the global economy, especially in light of the weaker prospects for exports to Europe. We therefore believe we will see somewhat lower growth rates in some of the emerging markets, although their rapid expansion will continue.
HealthCare
We expect the growth rate for the Pharmaceuticals market in 2012 to be in the mid-single digits. A major part of this growth will probably continue to take place in emerging markets such as China, Brazil, India and Russia. In the traditional markets such as the United States and the major European countries, we expect growth to be only in the low single digits.
The Consumer Care market is likely to expand at the same or a slightly slower rate than in 2011, with higher rates of growth in the emerging markets being offset by slower expansion in Europe and the United States. We anticipate that the Medical Care market will grow somewhat faster in 2012 than in 2011 in light of a stronger market for medical devices. We expect the Animal Health market as a whole to continue expanding in 2012 at the rate of recent years despite the weaker economic prospects for the first half.
CropScience
We expect the market environment for the global seed and crop protection business to remain favorable in 2012. Against a background of limited arable land and steadily rising demand for food, feed and plant-based energy sources, we expect prices to remain relatively high despite the volatility of world agricultural markets. Farmers’ overall economic prospects should therefore remain favorable, prompting further investment in seeds and crop protection products in order to safeguard and raise crop yields. The global seed and crop protection market should benefit from this development.
From a geographical perspective, we expect Latin America to post the strongest growth in 2012. There, the seed and crop protection market is set to benefit mainly from an increase in soybean cultivation, which already accounts for over one third of the Latin American market. In Asia/Pacific, too, we expect agricultural production to rise, though at slower rates than in Latin America. Expansion in Asia/Pacific will be driven by specialty crops such as fruit and vegetables, as well as by rice and cereals. In the industrialized regions of the northern hemisphere we expect lower overall market growth in 2012.
MaterialScience
For 2012 we anticipate that the global markets of importance to BMS will continue to grow, though perhaps more slowly. We believe Asia will retain its economic growth momentum.
We continue to expect robust global growth in the automotive industry. India and China, in particular, are likely to maintain their rapid pace of expansion. Sales in Western Europe are currently expected to decline, with demand in the Mediterranean countries remaining weak and car production in Germany heavily dependent on export markets. Vehicle sales in North America will probably increase in 2012, although a number of economic risk factors remain.
Robust growth is also forecast for the electrical/electronics industry. Demand is likely to rise in nearly all segments, especially in the BRIC countries (Brazil, Russia, India and China). In addition, the trend toward renewable energy sources is supporting further investment in western Europe, which could open up business opportunities for the electrical/electronics industry as well.
The recovery in the construction industry is likely to continue in 2012. The major Asian markets are expected to continue growing strongly, although construction output in China is likely to be somewhat below the 2011 level. The expected positive development in the U.S. construction sector currently remains subject to a number of risks. A slight decline is anticipated in Western Europe in view of the debt crisis.
Global furniture sales in 2012 are likely to show modest growth. We see significant potential in the positive market development in Eastern Europe and the Middle East. In North America, too, we predict a further recovery this year. Despite certain risks, we expect the Asian market to remain largely stable in 2012.
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