Economic Environment in 2022 BASF Report 2021 Management’s Report – Economic Environment in 2022 145 Forecast In this section: Economic Environment 2022 Outlook 2022 We expect the global economic recovery to continue in 2022. As a result, we anticipate global GDP growth of 3.8% Opportunities and Risks (2021: +5.8%). Global growth should be supported by the gradual containment of the coronavirus pandemic. In the advanced economies in particular, demand will increasingly shift from goods to services. However, the bottlenecks in global supply chains will ease only slowly. As order backlogs in industry are high, we expect global industrial production to grow at an above-average rate of 3.8% and chemical production at 3.5%. Economic Environment in 20221 At a glance energy prices and higher inflation rates could dampen consumer For the United States, we are forecasting growth of 3.8% (2021: purchasing power more strongly than expected in our forecast. 5.7%). Growth will be supported by government spending on infra- ▪ Moderate GDP growth expected in Europe and the United States structure, social and climate programs. A continued revival of the ▪ Strong growth assumed in Asia labor market should partially compensate for the phasing out of Trends in the global economy in 2022 extended unemployment benefits under the COVID relief package. ▪ Moderate growth in global industrial production Delays in the clearance of goods at U.S. ports should gradu ally ▪ Fragile recovery in the automotive industry Overall, we anticipate moderate GDP growth of 3.6% (2021: 5.2%) become less relevant as growth in demand for goods slows and ▪ Slower but still above-average growth forecast for the chemical in the European Union (E.U.). This will be driven in part by the shifts toward the services sector. In addition, congestion at ports industry economic upturn in the services sector and the gradual overcoming should gradually ease. Labor shortages will prevent a stronger of supply difficulties that we anticipate for the industrial sector. upturn, which will dampen the recovery in the services sector in Growth will also be supported by payments from the European particular. For Europe and the United States, we expect a moderate weaken- Recovery and Resilience Facility. We expect the differences in ing of growth momentum compared with the previous year. For growth rates between the E.U. member states to be less pro- We expect growth in the emerging markets of Asia to slow China, however, – which made an earlier start to its economic recov- nounced than in the previous year. The dynamic recovery in the overall. In China, the real estate sector will cool. In addition, the ery following the downturn in 2020 – we anticipate much slower but western European countries that grew particularly strongly in 2021 zero- tolerance policy toward the coronavirus pandemic will likely still solid growth. Growth in the other emerging markets in Asia will (France, Italy) is expected to weaken somewhat, while Germany curb the recovery in private consumption. We also assume that likely be slightly stronger than in the previous year. should see slightly stronger growth. In the eastern E.U. countries, selective measures to contain new coronavirus outbreaks will con- we expect growth rates to converge at a similar level. tinue to negatively impact industrial value chains and logistics. However, uncertainty about future developments remains high. The Overall, we expect Chinese GDP to grow by 4.5% in 2022 (2021: further course of the coronavirus pandemic could impact demand We expect the recovery to continue in the United Kingdom, 8.1%). Economic development in India remains uncertain given more severely than expected. Supply difficulties in the global value although this is subject to considerable uncertainty. In particular, the still low vaccination rate. We expect growth there to be slightly chains could continue for longer than assumed in our outlook. High labor shortages in logistics and hospitality may slow further recov- lower than in the previous year (2022: 7.0%; 2021: 8.1%). This will ery. Overall, we anticipate GDP growth of 3.8% there (2021: 7.5%). be driven in particular by a recovery in private consumption. In this 1 Our assumptions account for current estimates by external institutions, including economic research institutes, banks, multinational organizations and consulting firms.