‘Manufacturing growth decelerates’
The slowdown in global manufacturing growth evident since the end of 2017 continued in the first quarter of 2019. Emerging trade and tariff barriers involving the United States and China, as well as the European Union, have exposed markets to a significant amount of uncertainty, which in turn has affected investment and future growth.
In the first quarter of 2019, the manufacturing output growth rates of industrialized economies rose by a mere 0.4 percent compared to the same period in the previous year. Manufacturing growth rates have consistently declined each quarter, dropping from 3.5 percent at the end of 2017.
Growth estimates based on limited data for African countries generally indicate a very moderate rise in manufacturing output of just 0.7 per cent.
The manufacturing sector recorded a decline of about N77.92bn in output in the first quarter of this year, figures obtained from the National Bureau of Statistics have revealed.An analysis of the Gross Domestic Product report prepared by the NBS revealed that the sector recorded a total output of N1.69tn as of the end of the fourth quarter of 2017.
However, the level of productivity of the sector dropped by N77.92 billion from the fourth quarter figure of N1.68tn to N1.61tn. The sector had been badly hit by the harsh operating environment which took its toll on the profit margins of many companies operating in that segment of the economy.
The report said there were 13 sub-sectors that made up the manufacturing sector.Out of the 13 sub-sectors, only four recorded an increase in economic performance between December and March this year, while nine sub-sectors recorded a decrease in productivity.
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 industrialized country, experienced a year-on-year growth rate of just 0.5 per cent.
Disaggregated figures presented show that North America recorded a year-on-year growth rate of 1.8 per cent, down from 2.5 percent 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 industrialized economies in Europe grew by just 0.3 per cent.
Data for the first quarter of 2019 indicates 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 percent in Norway, 1.5 percent in the Russian Federation and 5.0 percent in Switzerland.
For industrialized 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.
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 Viet Nam by 5.1 and 4.1 percent 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. 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.
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