The global site of the UK's leading magazine for automation, motion engineering and power transmission
20 September, 2020

Product and Supplier Search

Facebook

Global manufacturing will not hit 2019 levels until 2024

19 May, 2020

Global manufacturing output will fall by 7.6% in 2020, but most countries will exceed 2019 levels of production by 2024 – some as soon as 2022 – according a new forecast from Interact Analysis. It expects the US, the UK, Italy, India and Brazil to be the countries whose manufacturing sectors will be worst affected by the Covid-19 pandemic, with South Korea and China being the least affected.

In a new free update to its Manufacturing Industry Output Tracker (MIO), Interact predicts a steady, but varied, recovery for global manufacturing. Transport-related sectors – aerospace, automotive and commercial – are likely to be the worst-hit, with food and beverage being the least-affected.

In January 2020, Interact predicted a gradual short-term rise in global manufacturing output, after the relatively lean years of 2018 and 2019. Covid-19 has completely changed that outlook, with the global economy disrupted “in a way never seen before”.

There have seen significant downturns in the past – notably in 2009 – but the new update points out that, while the current economic situation looks “disastrous”, the crisis happened when basic market fundamentals for many economies were sound. Recovery, therefore, though slow, will be sustained.

Interact predicts a pandemic-induced global contraction of manufacturing output of 7.6% during 2020. This is not as severe as the 8.6% contraction experienced in 2009, but is close. The analyst considered two key factors: which industries were most impacted by the virus; and how effective has each country been in controlling the virus and minimising disruption to its economy.

It says that transport-related industries have been the most severely affected, and predicts that they will remain below 2019 levels of productivity until beyond 2024. The disruption to airlines will have a long-term negative effect on the sector, as it did after 9/11, and the automotive industry will be hit by widespread unemployment, diminishing disposable income and the ability of consumers to purchase new vehicles.

The food and beverage sector, on the other hand, is unlikely to slow down over the coming five years. While the sector does not achieve high growth rates, it is stable due to constant demand, and tends to ride out downturns.

The time that it will take for manufacturing to recover in individual countries will depend largely on how effective they have been at handling the pandemic, and how badly they were affected. Interact expects badly stricken countries, such as the US, the UK and Italy to see a slower recovery in 2021, which will intensify in 2022.

In the UK, Interact expects manufacturing to contract by 9.3% this year, before returning to growth of 3.9% in 2021. In the US, a contraction of 10.3% in 2020, will be followed by 3.4% growth in 2021.

The time that Interact Analysis predicts it will take for various countries to recover - shown as a percentage of its MIO (Manufacturing Index Output) tracker
Source: Interact Analysis

In countries such as Korea and China, where the virus is seemingly under control, a significant recovery is expected as soon as 2021. Interact expects manufacturing in China to shrink by 4% this year, before returning to 5.5% growth in 2021. And in South Korea, a 4.9% contraction this year will be followed by a 4.7% increase during 2021.

Germany is likely to be an exception to the rule. Widely praised for its effectiveness in controlling the virus, its manufacturing base has a heavy reliance on exports, which will be severely hit as worldwide economies contract. To make matters worse, Germany’s automotive sector makes up one fifth of the country’s industrial output.

Of all the world’s major economies, Germany’s is the only one forecast to have a 2024 manufacturing output lower than in 2019. Interact expects German manufacturing output to slump by 13.4% this year, but to expand by 5% next year.

Interact Analysis’ CEO, Adrian Lloyd, describes his company’s MIO update as “a forensic analysis of the short- and long-term prospects of 16 key manufacturing sectors in 37 of the largest economies, as efforts are made to recover from the global shock of Covid-19.

“In recognition of the unprecedented situation manufacturers currently find themselves in, and reflecting Interact Analysis’s desire to play a part in aiding recovery,” he adds, “we are offering our latest MIO quarterly deliverable free-of-charge.”

The time that Interact Analysis predicts it will take for various manufacturing industries to recover - shown as a percentage of its MIO (Manufacturing Index Output) tracker
Source: Interact Analysis



Magazine
  • To view a digital copy of the latest issue of Drives & Controls, click here.

    To visit the digital library of past issues, click here

    To subscribe to the magazine, click here

     

Exhibition

Birmingham 2020The next Drives & Controls Exhibition and Conference will take place in Birmingham, UK, from 25-27 January, 2021. For more information on the event, visit the Show Web site

Poll

"Do you think that robots create or destroy jobs?"

Newsletter
Newsletter

Events

Most Read Articles