Economia globaleProspettive > Current trends of worldwide industrial production

Five structural changes

 

1. shorter sequence of economic crises since 2000

2. deeper crises

3. longer crisis overcoming

4. galloping national indebtedness

5. instead of an upward business trend non-uniform crisis overcoming with coexisting of growth, stagnation and setback of industrial production producing a stagnant total tendency.


Worldwide industrial production in 2020 Q1

Decline in global industrial production in the first quarter 2020

Symbolbild Weltwirtschaft

The worldwide industrial production is highlighted by four reports. This report quarterly investigated the situation of the worldwide industrial production and its outlook. A report deals with structural changes in the course of the industrial production, a report highlights the time from the outbreak of the world economic crisis to 2019 and finally a report shows the structurally changed process of the crisis overcoming.

June 13th, 2020The selected countries absorb 82% of machine exports from Germany. These are the three country groups industrialized countries (European Union, the USA, and Japan), BRIC countries (Brazil, Russia, India, China) and MIST countries (Mexico, Indonesia, South Korea and Turkey). The trend analysis is based on the five structural changes in the course of industrial production sinde 2000. These keywords are listed on the left side.

Decline in industrial production in the industrialised countries in 2019 further intensified in the first quarter 2020

Symbol picture industrialized countries.

The group of industrialized countries takes 60% of the German machine exports.

The group of industrialized countries takes 60% of the German machine exports.

In the first quarter of 2020 (blue-shaded area in the diagram), industrial production in the USA dropped by 2% compared to 2019, in Japan by 3%, in Germany by 4% and in the EU by 4%. 


With the exception of the USA, industrial production in the industrialised countries already started to decline in 2019. The pandemic has further exacerbated this decline, but did not cause it. In the USA, growth in industrial production had slowed down significantly in 2019.

Industrial production in the industrialized countries from 2008 to 2020.

The decline in industrial production in Japan, Germany and the EU in 2019 is the result of the interplay between growth, stagnation and decline in the global economy after the crisis was overcome.


This mixture of factors resulted in stagnation or only slight growth in the industrialized countries. After the crisis was overcome, industrial production in the USA grew by only 1.2% p.a., in Germany by 0.3% p.a., in the EU by 0.1% p.a. and in Japan industrial production fell by 0.1% p.a. This is explained in a trend report in this magazine.

In the BRIC countries, China's industrial production falls by 11% compared to 2019

Symbol picture BRIC countries.

The BRIC countries account for 15% of machinery exports from Germany. In China, industrial production broke down by 11% in the first quarter of 2020 compared to 2019. In the last global economic crisis of 2008, growing China had somewhat mitigated the slump in industrial production in the industrialised countries.


In Russia, on the other hand, industrial production can increase by 12%.

Industrial production in the BRIC countries from 2008 to 2020.

No OECD data are available for Brazil and India for the first quarter of 2020. It is likely that industrial production in Brazil will continue to decline.


The continued growth of the MIST countries in the first quarter of 2020 has its basis in the period after the global economic crisis. As the Trend Report in this magazine states   

 

  • China's industrial production grew by 9% annually until 2019   
  • those of India by 3.4% per annum and those of Russia by 2% per annum
  • Brazil's industrial production fell by 1.7% annually.

Growing industrial production of the MIST countries in first quarter 2020

Symbol picture MIST countries.

Industrial production in the MIST countries with a 6% share of machinery exports are growing in the first quarter of 2020.    

 

  • Indonesia's industrial production continues to grow in the first quarter of 2020.

  • After two years of stagnation and decline, Turkey's industrial production is again growing significantly in the first quarter.

  • South Korea's industrial production is also growing again after two years of stagnation.

  • Mexico's industrial production stagnated in 2017, since then the OECD has not provided any figures for Mexico.
Industrial production in Mexico, Indonesia, South Korea und Turkey (MIST) from 2008 to 2020.

Forecast for 2020

The process of overcoming the last global economic crisis of 2008/2009 led to a worldwide mixture of growth, stagnation and decline in industrial production. The galloping national debt to boost demand drove debt levels to record highs that can no longer be repaid by economic means. However, these gigantic amounts of money pumped into the cycle were not able to initiate new economic upswings.


A new global economic crisis with declines in industrial production has already developed in the industrialized countries in 2019, and in some cases as early as 2018. The pandemic has exacerbated this development dramatically, but not primarily caused it.


The outlook for 2020 will therefore most likely be dominated by a global economic crisis.


There is also a significant political factor. The "America first" policy of the Trump government aims to maintain the undisputed world position of the USA as number one by all means. This policy sees China as its main competitor for its leading world position.


Therefore, the current political situation in the world is characterised by a reorganisation and restructuring of the previous spheres of power and influence in favour of the USA or in favour of China. The USA will use all its means to restrict China as a competitor in all areas.


The economic effects of this policy will lead to the formation of blocks in the world economy, thus further constricting it. This reinforces stagnation and decline in global industrial production for 2020 and beyond.

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