BRATISLAVA, December 20, (WEBNOVINY) — The Association of Chemical and Pharmaceutical Industry of the Slovak Republic forecasts the chemical sector in Slovakia will achieve only slow to zero growth in 2012 due to anticipated recession. The association has even warned against a similar downturn that hit the industry in 2009. Most factors important for development of the local chemical sector are external. “Decisive will be Germany’s economic development but the rising exchange rate of the U.S. dollar, used to pay for crude oil and other raw materials and other influences may also contribute negatively to price growth of input materials,” Association President Roman Karlubik said.
Local factors may influence the situation, too. “Further increase of existing taxes and introduction of new ones, e.g., a dividend tax, would be a move going against business, with which the Association of Chemical and Pharmaceutical Industry cannot agree,” Karlubik said.
“Along with already introduced health insurance contributions, this would be another excessive additional taxation of business that deteriorates Slovak business environment and forces companies to seek ways to move out capital and relocate production away from Slovakia,” the Association’s President highlighted.
Enterprises understand the need to reduce the state budget deficit but they see more room to achieve this aim in bigger cuts to state expenses. “Should a tax hike be inevitable, excise taxes and VAT should be first,” Karlubik believes. He warned that banks might limit availability of loans as they are tightening lending conditions already now. Moreover, banks might not have enough free capital.
„The entire future of the Slovak chemical and pharmaceutical industry is fragile anyway. Three major factors impede the sector’s growth: the Emission Trading Scheme based on benchmarks, the REACH directive, and the adopted law on old environmental burdens that will require co-funding from companies,” he elaborated.
When the global economic crisis culminated in 2009, the Slovak chemical and pharmaceutical industry saw a 22-percent sales decline compared with 2008. Growth resumed in the following years but again slowed in H2 2011. Sales in April – June 2011 grew 37.8 percent from April-June 2010, sales in July-September rose by 23.7 percent y/y.