While it is not yet possible to assess the full impact of the latest economic crisis on industries in the European Union (EU), the pharmaceutical sector has fared better than others, says the European Commission.
Most EU industrial sectors have still not regained their pre-crisis production levels, and significant differences exist between sectors and member states, says the Commission’s latest annual EU Industrial Structure Report, published ahead of the Competitiveness Council meeting on February 20-21.
The worst-hit sectors are construction, mining and low-technology manufacturing, while high-tech manufacturing industries such as pharmaceuticals have been the least badly-hit, and the pharmaceutical sector has displayed positive growth rates since the end of 2012, it says.
“The developments for pharmaceuticals also partly explain the still-positive growth rates for high-tech manufacturing industries” - which have been the main engine of growth, being more resilient to the negative effect of the financial crisis due to both higher productivity and limited dependence on energy, says the Commission.
Overall, the report shows that the fragile recovery hinted at by positive growth in 2010-11 was interrupted by a downturn in the business cycle, and EU industries experienced a double dip. It also confirms that since 2001, manufacturing sectors as a proportion of economic output have declined further by three percentage points, to around 15% of Gross Domestic Product (GDP) in 2012.
Foreign investment into EU manufacturing has also been badly hit. Globally, EU member states together account for around 22% of inflows of foreign direct investment (FDI) and 30% of FDI outflows, but both have fallen significantly, with inflows in 2010 standing at around 30% of their 2007 levels and outflows having fallen still further.
The report shows the growing importance of global value chains for EU industry. The EU is still the largest player in world trade, in terms of both goods and services and investment flows, and globalisation is transforming its firms’ value chains through the creation of an increasing number of established cross-border networks. But EU enterprises need to strengthen their involvement in global value chains still further, to increase their competitiveness and ensure access to global markets in more favourable competitive conditions, it says.
The report “clearly shows that the 2008 crisis led to a significant acceleration of European industrial decline, and that industry needs targeted support to help it return to growth,” said European Commission Vice-President Antonio Tajani, the Commissioner for Industry and Entrepreneurship.
“Europe is still far from the 20% target of industry’s share in Europe’s GDP by 2020. To meet this goal, we need to focus on reindustrialisation,” he added.