Macroeconomic environment

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Gross Domestic Product (GDP) in real terms1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Growth

 

 

% Weighting2

 

2011

 

2012

 

2013

 

2014

 

2015

1

Source: Oxford Economics. The prior-year figures have been adjusted on the basis of the latest available data (as at 14 January 2016). The regional growth rates are only based on countries in which Linde operates. Information on individual countries and the world corresponds to the data from Oxford Economics.

2

Weighting is based on GDP 2015.

EMEA

 

29.4

 

2.6

 

0.5

 

0.9

 

1.6

 

1.5

Eurozone

 

15.7

 

1.6

 

−0.8

 

−0.3

 

0.9

 

1.5

Germany

 

4.6

 

3.7

 

0.6

 

0.4

 

1.6

 

1.5

Asia/Pacific

 

26.4

 

7.0

 

5.9

 

5.9

 

5.9

 

5.5

China

 

14.7

 

9.5

 

7.7

 

7.7

 

7.3

 

6.9

Americas

 

33.5

 

2.4

 

2.3

 

1.9

 

2.1

 

1.5

USA

 

24.4

 

1.6

 

2.2

 

1.5

 

2.4

 

2.4

World

 

100.0

 

3.3

 

2.5

 

2.4

 

2.7

 

2.5

 (XLS:) Download

Industrial Production (IP)1

 

 

 

 

 

 

 

 

 

 

 

 

 

% Growth

 

 

2011

 

2012

 

2013

 

2014

 

2015

1

Source: Oxford Economics. The prior-year figures have been adjusted on the basis of the latest available data (as at 14 January 2016). The regional growth rates are only based on countries in which Linde operates. Information on individual countries and the world corresponds to the data from Oxford Economics.

EMEA

 

3.4

 

−0.9

 

−0.3

 

1.3

 

1.0

Eurozone

 

2.3

 

−3.1

 

−0.9

 

0.6

 

0.7

Germany

 

7.4

 

−0.4

 

0.1

 

1.5

 

0.7

Asia/Pacific

 

9.5

 

7.4

 

5.1

 

5.1

 

4.2

China

 

10.6

 

8.2

 

7.9

 

7.3

 

5.9

Americas

 

3.0

 

1.9

 

1.8

 

2.7

 

USA

 

3.0

 

2.8

 

1.9

 

3.7

 

1.3

World

 

4.3

 

2.4

 

2.3

 

3.3

 

1.8

Global economic trends

Linde operates in more than 100 countries worldwide and offers its customers a diverse portfolio of products and services. Macroeconomic trends and economic conditions in the various regions therefore both have a significant influence on the Group’s business situation. To put the business performance of Linde into perspective, a summary is given below of the economic trends in 2015.

Based on data from Oxford Economics, global economic growth emerged weaker in 2015 than in 2014. In a global economy characterised by macroeconomic and geopolitical uncertainty, global real gross domestic product (GDP) rose by 2.5 percent, a slightly lower rate than in 2014 (2.7 percent). Global industrial production (IP), an important indicator for Linde’s business, increased by 1.8 percent only, compared to 3.3 percent in 2014. In fact, the global economy has grown more slowly than had been expected at the beginning of 2015, when economists were still forecasting a GDP and IP growth of 2.9 percent each. In the course of the past year, the world economy was adversely affected by significant slowdown among emerging markets, decline of commodity prices and its subsequent effect on the capital expenditure cuts in the mining industry in numerous countries. Continued geopolitical tensions and local trouble spots again hampered economic growth and recoveries in many countries. As a consequence of heightened uncertainty, currencies and financial markets showed high volatility in 2015.

EMEA (Europe, Middle East and Africa)

The economy in the EMEA region as a whole saw a growth rate of 1.5 percent in 2015 (2014: 1.6 percent). Industrial production grew by 1.0 percent, but decelerated compared to 2014 (1.3 percent). Whereas the actual GDP growth meets the forecast precisely, industrial production was lower than had originally been forecast at the beginning of 2015. Similar to the previous year, there were substantial variations in economic trends in the various EMEA sub-regions. In Western Europe, the positive trend continued with a GDP increase of 1.7 percent (2014: 1.3 percent). Out of the major economies in Western Europe, Germany, Spain, and the UK saw relatively robust trends. In Germany, GDP rose by 1.5 percent in 2015, which was close to its rate of 2014 (1.6 percent). The UK achieved growth of 2.2 percent (2014: 2.9 percent). Spain showed particularly strong growth to the tune of 3.2 percent, compared with GDP growth of only 1.4 percent in the previous year. After years of recession in Italy and stagnation in Portugal, both countries also achieved moderate growth in 2015. France achieved a higher increase in GDP as well with a growth rate of 1.1 percent compared to 0.2 percent in 2014.

In Eastern Europe, the economy weakened in 2015, driven by the large economic output slumps in Russia and Ukraine. GDP in Eastern Europe shrunk by 0.6 percent in 2015 compared to an increase of 1.3 percent in 2014. Industrial production in Eastern Europe decreased by 0.6 percent (2014: 2.7 percent). The positive economic development in Poland, Hungary, the Czech Republic, Romania and Turkey could not compensate for the negative development especially in Russia (–3.8 percent), but also in Ukraine (–11.0 percent) and Belarus (–3.2 percent).

In the Middle East, economic growth remained strong in 2015: GDP rose by 3.1 percent compared to 4.0 percent in 2014.

In the African economies, positive trends continued but dampened compared to the previous year. GDP of those African countries where Linde is present rose by 2.7 percent (2014: 4.2 percent). GDP in South Africa grew by 1.4 percent in 2015, slightly below the rate in 2014. Industrial production on the other hand increased slightly by 0.3 percent only (2014: 0.1 percent).

Asia/Pacific

The most favourable economic trends in 2015 were once again to be seen in the Asia/Pacific region. Here, GDP rose by 5.5 percent (2014: 5.9 percent) and industrial production by 4.2 percent (2014: 5.1 percent).

China reported slightly slower growth and announced GDP growth of 6.9 percent (2014: 7.3 percent), while industrial production expanded by 5.9 percent (2014: 7.3 percent). Both figures are slightly below the forecast. The Indian economy has made a remarkable turnaround since mid-2013: GDP growth reached 7.4 percent in 2015 compared to 7.1 percent in 2014. In South & East Asia, GDP was up 5.7 percent in 2015, similar to what was achieved in 2014 ( 5.6 percent). Industrial production rose by 4.0 percent (2014: 2.9 percent).

In Australia, the economic situation did not change significantly in 2015. The global drop in commodities prices resulted in a continued reluctance to invest: while GDP still increased by 2.4 percent (2014: 2.6 percent), industrial production rose by 2.1 percent only, which is much lower than in 2014 (2014: 4.6 percent). This increase was driven by the positive development in mining, while manufacturing activity has again declined in 2015.

Americas

GDP growth in the Americas region reached 1.5 percent, well below the rate in 2014 (2.1 percent). This was mainly driven by the recession in Brazil. The economic development in the US was again relatively robust in 2015. GDP increased by 2.4 percent in 2015 (2014: 2.4 percent). However, industrial production growth has disappointed. At only 1.3 percent, the rate was down considerably on the prior-year value of 3.7 percent and on early 2015’s forecast of 3.2 percent, largely due to the strong US dollar and the decline in investments in the oil industry.

In South America, on the other hand, the economic environment deteriorated in the wake of the recession in Brazil: GDP in the region decreased by 2.0 percent and industrial production fell by 4.8 percent, worsening the trends from 2014 (GDP: 0.6 percent, IP: −2.2 percent). GDP in Brazil, the biggest economy of the region, fell by 3.7 percent in 2015 after coming in at +0.1 percent in 2014.Meanwhile, industrial production in Brazil experienced an even deeper shock decreasing by 7.8 percent (2014: −2.9 percent).

The economic overview presented here for GDP and industrial production is based on the dataset from Oxford Economics as of 14 January 2016.