Buoyed by strong demand from Asia, Germany's key chemical sector is expecting a 5.5-per-cent rise in sales this year,the industry's association (VCI) said Thursday.

The VCI forecast production to grow 2.5 per cent despite increasing raw material prices and the threat posed to German chemical makers' foreign orders by the strong euro.

This comes after production rose 3 per cent in the first half of 2008, with the chemical sector one of Germany's key exporters.

However, signs of the impact on the industry of slowing global growth should emerge in the coming months, with production already slowing from last year's levels.

'The upswing in the German chemical industry continued during the first half of year, despite the current difficult circumstances, however, with less dynamic than in last year,' said VCI chief Ulrich Lehner.