Management Report & Annexes | Report on Future Perspectives and on Opportunities and Risks

20 Future Perspectives

20.1 Economic Outlook

Global economy

Economic Outlook[Table 3.20.1]
Growth* 2013 Growth forecast* 2014
World +2.5% +3.3%
European Union +0.1% +1.3%
of which Germany +0.4% +1.8%
United States +1.9% +2.7%
Emerging markets** +4.7% +5.3%
* real growth of gross domestic product, source: Global Insight; source for Germany: Federal Statistical Office (2013) / Federal Ministry of Economics and Technology (2014)
** including about 50 countries defined by Global Insight as emerging markets in line with the World Bank
as of February 2014

The global economy will probably grow more quickly in 2014 than in the previous year, with positive impetus coming mainly from the industrialized countries, especially the United States. At the same time, the European economy appears to have overcome the recession. The major central banks will likely continue to support global growth overall, although a cautious normalization of monetary policy is expected in the United States.

We anticipate moderate growth in the European Union as a whole, supported in particular by the ­relatively favorable economic situation in Germany and the United Kingdom. Some southern Euro­pean countries, however, are likely to see only slight or even negative GDP growth. The economy will continue to be hampered by high unemployment and a lack of international competitiveness in some countries.

The economic recovery in the United States is predicted to continue, buoyed by low energy prices, the recovery in the property market and other factors.

We also expect the emerging countries to grow faster than in the previous year, mainly because their exports are likely to benefit from higher demand from the industrialized countries. China will probably remain among the principal drivers of global economic expansion in 2014, with growth matching the previous year.

Economic Outlook for the Subgroups[Table 3.20.2]
Growth* 2013 Growth forecast* 2014
HealthCare
Pharmaceuticals market +3% +4%
Consumer Care market +5% +4%
Medical Care market -2% -2%
Animal Health market +3% +4%
CropScience
Seed and crop protection market ≥ 5% ≥ 5%

MaterialScience

(main customer industries)

Automotive industry +3% +5%
Construction industry +3% +4%
Electrical/electronics industry +4% +6%
Furniture market +3% +4%

* Bayer’s estimate; excluding pharmaceuticals market, source: IMS Health. IMS Market Prognosis. Copyright 2014. All rights reserved; currency-adjusted; 2013 data provisional

as of February 2014

HealthCare

The pharmaceuticals market is predicted to grow somewhat faster in 2014 than in the prior year. We expect a further increase in the demand for medicines in the emerging economies. Pharmaceutical sales will probably increase in the United States and a number of European countries, mainly due to the launch of new products – despite a persistently restrictive health policy environment.

Following the strong cold season in the previous year, the consumer care market will likely normalize and expand at a somewhat slower pace in 2014. We expect to see further slight shrinkage in the medical care market in 2014, with the diabetes care market weakening and the market for contrast agents and medical equipment (Radiology & Interventional business unit) almost reaching the previous year’s level. Growth in the animal health market in 2014 is forecasted to exceed the previous year in view of favorable economic prospects in important markets.

CropScience

Following the dynamic growth in the global seed and crop protection market last year, we expect the market environment to remain favorable in 2014 but weaken over the course of the year. Price levels are expected to stay relatively high from a historical perspective, mainly in light of the steady rise in demand for food and feed products. However, prices for agricultural commodities are likely to be lower than in the previous year. As a result, the economic prospects for farmers will likely remain positive, encouraging investment in high-value seed and crop protection products. However, it is also predicted that global inventories for most agricultural commodities will increase. We thus anticipate an overall growth rate in the mid-single digits in 2014, which would be lower than in the preceding year.   

We expect Latin America to continue experiencing the strongest growth. This region’s seed and crop protection market is mainly characterized by the steady expansion of soybean farming, which accounts for nearly 40% of the cultivated land area. In Asia/Pacific, too, we expect agricultural production to ­continue expanding, though with markedly lower growth rates than in Latin America. The trend in this region will mainly depend on cereals and rice along with specialty crops such as fruit and vegetables. We see Eastern Europe and parts of Africa as further regions with above-average growth potential, albeit from relatively low levels. In the industrialized regions of the northern hemisphere, however, we ­expect markets to expand much more slowly than in 2013.

MaterialScience

We expect the business climate for our principal customer industries to improve during 2014. In North America there are clear stimuli to growth, raising hopes that the economy will continue to stabilize. ­Distinct recovery trends are also apparent in the emerging economies of Asia. On the other hand, the economic recovery in Western Europe will likely progress at a slower pace, while the development in Latin America involves certain risks.

We expect the automotive industry to develop positively in 2014, with the principal growth stimuli ­coming from Asia and North America because of rising demand. The sector will post a slight expansion in Europe.

The global construction industry will probably continue to recover in 2014, mainly as a result of robust investment activity in North America and Asia. Continuing positive development in private housing construction in the United States and stable investment in China and India are likely to contribute to this.

Robust growth is predicted for the global electrical/electronics industry in 2014. Demand is forecasted to grow briskly in nearly all market segments, mainly in Asia and especially in China. In Western Europe, however, we expect to see persistently weak growth due to the ongoing debt crisis.

We expect the development of the global furniture industry to show regional variations in 2014. The ­demand for furniture in Europe as a whole will probably show only a slight increase, while there are signs that the market in North America will continue to recover. In Asia we expect to see stable growth.

Last updated: February 28, 2014  Copyright © Bayer AG
http://www.annualreport2013.bayer.com