2020 was a year of its own – a man-eating a bat and spreading COVID-19 to every corner of the world; it was intriguing yet horrifying. After twelve years of the Great Recession, the economy was finally coming back on track, and there was steady growth, but the virus had other plans for us. Be it limiting the social interactions, banning trading functions, destroying the global economy, and killing millions of people; COVID-19 has been an absolute horror.
Needless to this, this horror spread to the chemical industry all the same. However, with the onset of vaccination and herd immunity, the world will likely be coming back to normal, and so will the economic growth. But again, it’s essential to know how much damage is done to the economy and how long it will take for the chemical industry to come back with a bang!
According to the IMF, the global economy dropped by 4.4% in the year 2020, and this decline in the economy has been termed worse than the Great Recession of 2008. In fact, the economy hasn’t been hit this hard since the Great Depression of the 1930s. To illustrate, the FTSE recorded an economic loss of 14.3% last year, but the Chinese economy grew by 2.3% – it’s ironic how the origin country of COVID-19 while the entire world struggled.
According to the research published by the SCI, the chemical output dropped by 5.% in EU27 during January and June. In America, the ACC reported that the chemical production reduced by 3.6%, including the pharmaceuticals. The ACC report also suggests that the US’s chemical industry showed mixed performance because plastic resins witnessed positive growth, given the important role it played in producing PPE.
On the other hand, the other chemical segments only struggled particularly with synthetic rubber, which is a well-known manufacturing material. As for the specialty chemicals, the demand faltered across every market medium. It wouldn’t be wrong to say that this pandemic has impacted some sectors of the chemical industry more than others. For instance, there was hardly any harm to the petrochemical sector since the demand for ethylene and ethylene oxide was retained.
This was basically because ethylene is used in creating polyethylene wrap for packaging the tissues and toilet papers, while ethylene oxide is an important ingredient of detergents. In 201, the plastic packaging manufacturers are likely to witness more than 6% of growth, given the rebound in end-customer markets.
When Will the Chemical Industry Recover?
It’s evident that the chemical industry will recover and jump back, but it might take a longer time as compared to other markets, such as retail, food, and hospitality business. This is because the mandated closings were set in the chemical industry. According to previous forecasts, the chemical industry was predicted to come back to pre-pandemic growth by the end of the year 2021, but the chance has thinned by 50%. To ensure full recovery, the American chemical industry needs to recoup a 3.6% decline in output.
As a whole, the global economy will witness a growth of 5.2%, which is obviously a plus, but the western chemical industry is likely to remain in a trough. As for the overall growth, it will be led by China and India since they are predicted to grow by 8.2% and 8.8%, respectively. On the other, the service-oriented economies, including Italy and the UK, will experience slow growth.
As far as the chemicals are concerned, the demand for chemicals increases when manufacturers start operating again and start manufacturing products. That being said, the chemical companies will get a push, and chemical outcomes will grow by 3.9% by the end of this year (2021). The chemical sectors that were safe during the pandemic, such as construction chemicals, food additives, and plastics, will showcase better growth as compared to fiber and synthetic rubber as they struggled badly.
It’s an established fact that economic predictions contain some guesswork because even the top experts are left in the dark. To summarize, recovery ought to happen – some sectors will grow better than others, but the view will be clear when the pandemic is finally over!