Germany's chemical and pharmaceutical industry is bracing for a 5.5% drop in production this year, a trade body said on Wednesday, pointing to the high cost of energy and raw materials as well as continued supply chain problems.

Excluding phamaceuticals, production is expected to fall by as much as 8.5%, the VCI chemical industry association added.

Previously, the group had forecast an industry-wide decline of 1.5% or 4% excluding pharmaceuticals.

"The immense challenges are putting the competitiveness of our companies in serious jeopardy," said Christian Kullmann, chief executive of Evonik Industries and president of the VCI.

Production in the German chemical and pharmaceutical industry slumped by 5.4% year on year in the second quarter of 2021, the group said. Excluding pharmaceuticals, the fall was as sharp as 8.2%

At the same time, Q2 revenue went up by 21.6% year on year thanks to an increase in producer prices of around 24%, the VCI said, while warning that companies were finding it increasingly difficult to pass on rising costs to customers.

Over the whole year, revenues for the chemical and pharmaceutical industry is expected to grow by 16%. (Reporting by Patricia Weiss, Writing by Rachel More, Editing by Madeline Chambers)