(Reuters) -Chemicals maker Evonik Industries on Tuesday welcomed the German government’s proposed infrastructure fund and stimulus measures as a move to support the country’s economy but said key details remained unclear.
Germany has introduced a series of major fiscal measures to stimulate its economy, including a 500-billion-euro infrastructure fund and a 46-billion-euro tax relief package to support businesses through 2029.
Evonik said increased investment in the construction sector could boost demand for its products. It also expects cost savings of around 30 million euros ($35 million) in 2026 as a result of lower energy taxes.
The company supplies a range of materials used in construction, including coating additives for building protection and decorative paints, polyurethane foam additives for insulation and appliances, and polyamide 12 for tubes and pipes.
FUND MAY BOOST CONSUMER CONFIDENCE, EVONIK SAYS
The infrastructure fund could also help boost consumer confidence in Germany and across Europe, the German company said in an emailed statement to Reuters.
However, recent data suggests sentiment remains fragile, with Germany’s GfK index falling to -24.1 in November amid sharply declining income expectations.
Evonik also posted its third-quarter results earlier today with core profit dropping 22% year-over-year, weighted by subdued demand in challenging market conditions.
MANY QUESTIONS STILL UNRESOLVED
Despite the potential benefits, Evonik said unresolved issues, such as the timeline, the speed at which funds will be spent, and whether the full 500 billion euros will be allocated within Germany could affect the fund’s effectiveness.
The fund could potentially result in an additional 1% gross domestic product growth each year in Germany, it said.
Germany’s chemical industry association said fiscal stimulus should enable the economy to grow slightly.
“This could also lead to a rise in demand for chemical products,” the VCI said.
($1 = 0.8575 euros)
(Reporting by Anastasiia Kozlova; Editing by Matt Scuffham)
