The slowdown in global manufacturing growth evident since the end of 2017 continued in the first quarter of 2019, a report by the United Nations Industrial Development Organisation (UNIDO), has said.
It attributed the slowdown to emerging trade and tariff barriers involving the United States and China, as well as the European Union (EU), which exposed markets to a significant amount of uncertainty, which in turn affected investment and future growth.
The report, which was released this week, said in the first quarter of 2019, the manufacturing output growth rates of industrialised economies rose by a mere 0.4 per cent, compared to the same period in the previous year.
It noted that manufacturing growth rates have consistently declined each quarter, dropping from 3.5 per cent at the end of 2017.
The report said disaggregated figures presented show that North America recorded a year-on-year growth rate of 1.8 per cent, down from 2.5 per cent in the fourth quarter of 2018.
Against the backdrop of the uncertainty about the timing of the United Kingdom’s withdrawal from the European Union (Brexit) and about the nature of their future economic relationship, disaggregated data shows that the manufacturing output of industrialised economies in Europe grew by just 0.3 per cent.
Data for the first quarter of 2019 indicated a negative year-on-year growth rate for two leading eurozone economies: manufacturing output fell by 2.3 per cent in Germany and by 0.9 per cent in Italy.
France and Spain, by contrast, witnessed positive year-on-year growth rates in the first quarter of 2019 (1.3 per cent and 1.1 per cent, respectively), following decreases observed in the fourth quarter of 2018.
Manufacturing output rose by 2.8 per cent in Norway, 1.5 per cent in the Russian Federation and 5.0 percent in Switzerland.
For industrialised economies in East Asia, the year-on-year growth rate declined for the first time in 11 consecutive quarters.
Manufacturing output contracted by an estimated 1.1 per cent in the first quarter of 2019, compared to the same period of the previous year.
Negative growth rates were observed in Japan (-1.1 per cent), the Republic of Korea (-1.7 per cent), Taiwan, Republic of China (-3.7 per cent) and Singapore (-0.3 per cent).
According to UNIDO’s seasonally adjusted estimates, China’s manufacturing output in the first quarter of 2019 expanded at its strongest pace since 2015, reaching a growth rate of 7.3 per cent compared to the same period of the previous year.
The report said this improved growth figure amid an uncertain global trade environment might be influenced by the Chinese government’s infrastructure investments in addition to fiscal and monetary stimulus.
Experts have warned that the expansion in production is linked to stockpiling across the globe to sidestep potentially rising tariffs. This will likely have a negative effect on demand in forthcoming quarters.
Among other Asian countries, manufacturing growth slowed in India and Turkey, but increased in Indonesia and Vietnam by 5.1 and 4.1 per cent, respectively.
Latin America’s year-on-year growth rate remained negative in the first quarter of 2019. The contraction of 1.2 per cent compared to the same period of the previous year was primarily attributable to Argentina’s continued recession and Brazil’s declining manufacturing output.
The UNIDO report, however, said growth estimates based on limited data for African countries generally indicate a very moderate rise in manufacturing output of just 0.7 per cent.
With growth rates of 6.3 per cent and 3.1 per cent respectively, Cote d’Ivoire and Morocco represented countries with significantly expanding year-on-year manufacturing production in the first quarter of 2019.
However, South Africa, the region’s most industrialised country, experienced a year-on-year growth rate of just 0.5 per cent.
Globally, despite the slowdown, output growth in medium high- and high-technology sectors remained higher than in low-technology sectors, a shift towards high-technology manufacturing that indicates a structural change is underway.