German chemical industry sees no turnaround ahead, cuts 2026 forecast

Germany's chemical and pharmaceutical industry saw production and sales decline in the first half of 2026 and investment falling for a third consecutive year, the industry's VCI association said on Thursday.

Production in the first six months of the year was around 3% lower than a year earlier, while sales fell 1% to €106 billion ($121.5 billion), the association said.

The association lowered its full-year production forecast, now expecting output to decline by 1.5% in 2026 after previously forecasting no change.

It said many production facilities remain underutilized, exports are weak and profits continue to be squeezed by high costs and intense international competition. 

In 2025, only the strong performance of the pharmaceutical sector limited the industry's production decline to 0.5%.

The VCI said the continued fall in capital investment was "particularly worrying," with spending on fixed assets now around 15% below 2023 levels. High energy and production costs, along with other unfavourable business conditions in Germany, are among the biggest obstacles to investment, it said.

The association urged Germany's government to pursue broad reforms to strengthen the country's industrial base, including more competitive corporate taxes, lower labour costs, faster permitting procedures and less bureaucracy.