1. GENERAL ECONOMIC SITUATION - 2002
German economic growth suffered considerably in 2002 as a result of the drastic decline in corporate investment and in the construction industry. Gross domestic product increased only 0.2 percent, the lowest growth since the recession of 1993. On a European scale, Germany remains the country with the lowest growth rate.
Weak domestic demand was the main factor slowing economic growth in Germany by 1.3 percentage points altogether. Private consumption declined for the first time since the country's reunification, with a drop of 0.5 percent. The last even larger decline was in 1982. Capital expenditure even declined by 6.4 percent in 2002. Only the major export surplus prevented the economy from shrinking altogether. Exports rose 2.9 percent in 2002. Due to the sluggish economy, the national deficit equalled 3.7 percent of GDP and therefore clearly exceeded the 3.0 percent limit of the European stability pact.
The economic weakness will continue until well into the year, due in particular to the considerable burden imposed on private households. Higher taxes and a tangible increase in contribution rates for social security will prevent any rise in available income. Most forecasters expect growth to remain below 1 percent in 2003.
The weak economy is increasingly being reflected in the labour market, with unemployment once again exceeding four million on average for the year in 2002.
2. PERFORMANCE OF THE PAPER AND WOOD INDUSTRY - 2002
German pulp mills produced 891 000 tonnes of pulp in 2002, 2 percent more than in the preceding year. 4.1 million tonnes of paper-grade pulp were imported to Germany in 2002, while only 497 000 tonnes were exported.
Despite the fairly difficult basic conditions of the German economy, 2002 was not such a bad year for the paper industry, although the main grades did develop differently. While graphic papers continued to suffer from the sluggishness in advertising worldwide, packaging profited from the change in consumer buying behaviour, with more packed goods being purchased from mail-order companies.
Total production output of paper and board rose 4.0 percent in 2002 to 18.6 million tonnes, outstripping the record level of 2000, as a result of new capacities. This increase was to a large extent due to higher exports to Eastern European countries and overseas. Exports as a whole were up 8.5 percent, at 9.5 million tonnes, while imports rose 5.0 percent, to 9.9 million tonnes. Apparent consumption increased 2.4 percent, to 19.0 million tonnes.
Raw material markets developed differently for the German paper industry. Pulp prices have remained fairly constant since autumn 2001. Wood consumption declined by 0.8 percent over the preceding year, with prices remaining virtually unchanged. The paper industry's consumption of recovered paper was 4 percent higher, with prices stabilizing in the second half of the year after changing dramatically in the first six months.
The positive trend in production output is not reflected in sales which declined by 3 percent from 12.6 billion euros to 12.2 billion euros in 2002. This is due above all to lower sales revenues in some segments - especially press paper. The official producer price index for paper and board (1995 = 100) lists an average value of 97.5 points for 2002, 2.8 percent lower than the average of 100.3 points in 2001.
In keeping with the overall economic trend, 2003 has started sluggishly for the paper industry. The situation is not expected to improve before the second half of the year at the earliest, as the economy picks up in general.
3. ISSUES OF PARTICULAR INTEREST
a. Illegal logging
In the light of the Summit on Sustainable Development in Johannesburg, the Confederation of European Paper Industries (CEPI), and the Association of the German Pulp and Paper Industries, as a member of CEPI, have committed themselves to use only material from sustainably managed forests and to implement practices and measures to combat illegal logging and trade in illegally harvested wood.
Illegal logging is an important issue with serious environmental, social and economic consequences. The need for action at different levels has been internationally recognized in order to strengthen good governance, to ensure law enforcement and to combat practices which result in forest degradation and loss. It is also important in order to combat the negative perception of forest industries and their products.
At the moment, this issue does not feature very high on the political agenda. In early 2002, the Federal Parliament called upon the Federal Government to take measures against trade in illegally harvested wood. The ENGOs are concentrating on logging activities in the Amazon region, Indonesia and the Russian far east.
b. Environmental aspects
The draft EU Directive on Emissions Trading dated 23 October 2001 includes the pulp and paper industry among the energy-intensive branches of industry from 2005. Since measures to reduce CO2 emissions have already been implemented in the various Member States - such as the voluntary agreement on climate protection by German industry - these must be taken into account in the measures to improve climate protection. The voluntary participation in emissions trading demanded in the past could not be enforced following the latest resolution of the EU Council of Environment Ministers on 9 December 2002. Instead, it will be possible to exclude certain industrial plants and branches from the draft Directive during the initial period from 2005 to 2007.
The voluntary agreement by German industry was updated in December 2000 and now includes an undertaking to reduce specific CO2 emissions by 35 percent on a German industry-wide level by 2012, with 1990 as the base year.
The German pulp and paper industry had already, in 1998, surpassed its voluntary agreement to achieve a 22 percent reduction in specific CO2 emissions by 2005 (1990 base year). For this reason, the agreement was extended, in 2000, until 2012 as part of the aforementioned "industry-wide agreement by German industry" and its scope similarly increased to a 35 percent reduction in specific CO2 emissions.
If individual members of the pulp and paper industry were to take part in the trading of emissions, this voluntary agreement would be meaningless, since a reduction in CO2 emissions in Germany could no longer be guaranteed as CO2 certificates are bought and sold.
c. Progress in sustainable forest management and certification
To date, 427 403 ha of forest land have been certified in Germany in accordance with the FSC guidelines.
In 10 of the 16 German Länder, 6 206 391 ha or 58 percent of the total forest land have been certified according to PEFC rules.
Mutual recognition is necessary, following acceptance of the FSC and PEFC rules as being useful to achieving sustainable forest management by the various parties consulted (Federal Environment Agency, Federal Parliament, study by the University of Hamburg). This position will be supported by the trade union of the paper industry (IG BCE).
Paper and board (`000 tonnes)
2002* |
2001 |
2002:2001 (%) | |
Production |
18 594 |
17 879 |
4.0 |
Exports |
9 526 |
8 780 |
8.5 |
Imports |
9 918 |
9 446 |
5.0 |
App. consumption |
18 986 |
18 545 |
2.4 |
Export quota |
51.2 |
49.1 |
|
Import quota |
53.3 |
52.8 |
* estimated
Fibres for the production of paper and board (`000 tonnes)
2002* |
2001 |
2002:2001 (%) | |
Chemical pulp for paper production |
891 |
874 |
2 |
- exports |
497 |
411 |
21 |
+ imports |
4 067 |
3 697 |
10 |
= app. consumption |
4 460 |
4 160 |
7 |
Mechanical pulp for paper production |
1 240 |
1 229 |
1 |
- exports |
16 |
17 |
-3 |
+ imports |
161 |
153 |
5 |
= app. consumption |
1 385 |
1 365 |
1 |
Recovered paper collection |
13 682 |
13 825 |
-1 |
- exports |
3 492 |
3 924 |
-11 |
+ imports |
1 820 |
1 625 |
12 |
= app. consumption |
12 010 |
11 526 |
4 |
Fibres in total (app. consumption) |
17 855 |
17 051 |
5 |
* estimated