Global manufacturing growth is expected to accelerate in 2017 thanks to a steady recovery in industrialised economies and the reversal of negative trends observed in Latin American economies in 2016.
Worldwide, the scope of domestic demand for manufactured products has widened in 2017. The current world manufacturing output growth trends, based on the data for second quarter of 2017, are explored in a report published by the United Nations Industrial Development Organisation (UNIDO).
World manufacturing output is expected to rise by 3.2 per cent in 2017 – the highest rate in the last six years. The manufacturing output of industrialised economies is expected to increase by 1.8 per cent in 2017 and these economies will contribute almost 40 per cent of the total global industrial growth in 2017.
The growth performance of European industrialised countries is likely to improve in 2017, with an expected rise of manufacturing by 1.6 per cent. Figures for the second quarter show that manufacturing output rose by 3.5 per cent in Austria, 2.4 per cent in France, 2.9 per cent in Germany and 3 per cent in the Netherlands. Much higher manufacturing growth rates were observed in Bulgaria with 8.5 per cent, Estonia with 8.9 per cent and Slovenia with 8.3 per cent. Among non-European Union economies, manufacturing output rose by 2.8 per cent in the Russian Federation and 2.4 per cent in Switzerland.
The manufacturing output of the United States rose by 1.5 per cent in the second quarter of 2017, the highest rate for the last several quarters. Japan exhibited an impressive growth of 5.8 per cent in the second quarter of 2017.
Developing and emerging industrial economies are likely to maintain higher manufacturing growth at a rate of 5 per cent in 2017. China’s growth will remain strong at 6.3 per cent. The manufacturing output of Asian developing economies is expected to rise by 6.2 per cent in 2017.
Among the fast-growing Asian economies, manufacturing output in the second quarter of 2017 rose by 4.7 per cent in Kazakhstan, 5.9 per cent in Malaysia and 11.1 per cent in Vietnam.
Manufacturing growth trends have improved in Latin American economies. Recent quarterly figures indicate that the declining trend of manufacturing output has been reversed in Brazil and positive growth has been achieved in a number of countries, including Argentina and Chile.
Africa in general is expected to improve its growth performance in 2017. However, manufacturing in South Africa, the largest manufacturer of the continent, is likely to contract in the wake of a new recession with considerable negative impact on the Southern African region. Manufacturing in the least developed countries (LDCs) of Africa is expected to grow by around 4 per cent. However, this is lower than the required growth rate to achieve Sustainable Development Goal (SDG) target 9.2 by 2030.
According to UNIDO, “Africa’s manufacturing output increased to 10.5 per cent in the second quarter of 2017, however, it should be noted that estimates for Africa are based on limited data revealing high instability and volatility. A two-digit growth rate was registered in Egypt; Cote d’Ivoire only barely missed a two-digit growth rate, Morocco experienced a 2.3 per cent growth, while Senegal’s and Tunisia’s manufacturing output dropped by 3 per cent and 0.4 per cent, respectively, compared to the same period of the previous year.
“South Africa, the region’s most industrialised economy, saw a contraction rate of 1.7 per cent in the second quarter of 2017, the third quarter of depressed manufacturing production in a row. Weak manufacturing together with a shrinking trade sector, uncertain political landscape and stunted investment signals potentially dim prospects, and perhaps not only for 2017,” the UNIDO report stated.
It also presents the growth estimates by manufacturing sectors. With improved investment environment and consumer confidence, global production of machinery equipment rose by 7.9 per cent and the production of motor vehicles increased by 5.9 per cent in the second quarter of 2017. In general, the production growth of high-tech industry has been higher than low-tech sectors, reflecting a structural change in world manufacturing.