Macroeconomic and industry-related conditions
moderate growth while general economic conditions remain difficult
In 2013, the global economy1 showed only moderate growth. Gross domestic product grew by approximately 2 percent around the world. Mature markets exceeded the prior year's level only slightly, by approximately 1 percent, while emerging markets achieved an increase of approximately 4 percent.This trend continues to be driven by the ongoing heterogeneity of economic development in Europe, the uncertainty surrounding the fiscal policy in the USA, and the slow-down of growth in the emerging markets.
Developments in 2013:
stronger second half of the year
Over the course of the year under review, global economic growth improved. Economic output recovered primarily in the second half of the year, influenced by improvements in Germany, the USA and Japan.
Industry and consumption:
industry shows moderate growth
With an increase of approximately 3 percent, industrial production expanded somewhat more than private consumption, which rose by around 2 percent. While the export-dependent industries in particular posted moderate increases, growth in consumer-related sectors was markedly subdued.
mature markets moderate, emerging markets robust
Over the year as a whole, both the North American and Japanese economies posted moderate growth of around 2 percent. In Western Europe, economic growth was only slightly positive overall due to recessionary trends seen particularly in some of the Southern European countries, whereas Germany's economy managed to grow by approximately 0.5 percent, driven by exports and low unemployment. The emerging markets of Asia (excluding Japan), Latin America and Africa/Middle East registered comparatively robust economic growth, albeit at a rate that was below the previous year. Asia (excluding Japan) boosted its economic output by approximately 5 percent, driven mainly by China. Latin America grew by approximately 2.5 percent and Africa/Middle East approximately 3 percent. By contrast, economic growth slowed to approximately 1 percent in Eastern Europe, primarily as a result of declining demand from Western Europe.
unchanged year on year
Overall, prices for externally sourced materials and services (direct materials) remained at the level of the previous year. On average, raw material prices in 2013 were slightly below the level of the prior year. Input materials, which are used in the production of direct materials, were again characterized by fluctuation in 2013. The price movements varied by region and type of input material. In contrast, prices for packaging and purchased goods rose slightly.
devaluation against the euro
Taking the average for the year, the US dollar and the important currencies for Henkel in the emerging markets experienced substantial depreciation versus the euro compared to the previous year. However, the development of the US dollar was volatile throughout the year: At the beginning of the year the euro rose steadily, occasionally reaching 1.36 US dollars toward the end of January. Around the middle of the year, the euro drifted steadily lower to 1.30 US dollars before ending the year at just under 1.38 US dollars.
Changes in the exchange rates of other currencies important to Henkel are indicated in the following table:
moderate rise in global price levels
Global inflation was around 3 percent. Year on year, the rate of inflation decreased in the mature markets, while consumer prices rose in the emerging markets. The overall trend differed by region and country. Inflation declined in North America and Western Europe – including Germany. In Eastern Europe and Asia, prices increased slightly while rising significantly in Latin America and Africa/Middle East.
unchanged year on year around the world
Global unemployment was on a par with the prior year at approximately 7 percent. The unemployment rate in North America improved versus the previous year to approximately 7.5 percent, while unemployment in Western Europe climbed to approximately 10 percent. Year on year, the unemployment rate in Germany remained flat at around 7 percent. It was unchanged in Eastern Europe, and improved slightly in Asia and Latin America.
Development by sector:
minor increase in global consumption
Growth in private consumer spending remained subdued at around 2 percent. Consumer spending in mature markets actually increased by only around 1 percent year on year. Consumers in North America increased their spending by approximately 2 percent. The debt crisis continued to restrain consumer spending at the level of the previous year in Western Europe, while Germany experienced an increase of approximately 1 percent. The emerging markets demonstrated a higher propensity to spend, with consumption increasing by approximately 4 percent.
Industry with moderate growth
Industrial production expanded at a moderate rate of approximately 3 percent in 2013, which was again slightly faster than the economy as a whole. Growth in 2013 was driven by export-dependent sectors such as electronics, metal processing, and transport.
Developments in industrial production differed from one region to the next. In North America, production expanded by approximately 2 percent while the growth rate in Eastern Europe was below the previous year. The debt crisis actually caused negative industrial growth in Western Europe. Latin America reported significant recovery from the previous year, with growth of around 1 percent. Asia recorded growth of approximately 6 percent, similar to the previous year.
A particularly important customer sector for Henkel, the transport industry, saw production expand by approximately 3 percent. Production in the electronics sector rose by around 4 percent. Within the electronics sector, the market for basic products such as electrical systems and semiconductor units was weaker and recorded only moderate growth. Constant growth in comparison to 2012 was seen in the metal industry, which expanded by around 3 percent. Expansion in consumer-related sectors, such as the global packaging industry, was extremely sluggish. These sectors had only marginal growth along with food products, beverages, paper and printing. In 2013, production in the construction industry increased by around 3 percent.
Source of global economic data, industry & consumption: Feri EuroRating Services, January 2014.