Global manufacturing output up but emerging economies fragile: UN report
Africa saw its manufacturing output for the first quarter of 2014 rise only by a marginal 0.71% compared to January to March 2013, and actually fall 0.43% compared to the last quarter of 2013. (Image: United Nations)
Recession? What recession! According to a UN report, world manufacturing is in a phase of steady growth, showing that recovery has firmly taken root and signaling an end to recession.
The improved financial condition of industrialized countries, especially in Europe, and China’s continued growth are responsible for pulling up global manufacturing output, the United Nations reported on June 11, 2014.
Output rose by 5.1% in the first quarter of 2014, the highest rate in several years, according to the UN Industrial Development Organization (UNIDO).
“Higher growth in the production of durable goods, such as household equipment, electronic goods and motor vehicles, indicated rising consumer confidence in long-term stability,” the UN agency reported.
However, growth prospects for developing and emerging industrial economies remain fragile.
While overall manufacturing output grew 9.4% in developing and emerging industrial economies in the first quarter of 2014, the majority of the growth was contributed by China whose output grew by 13.1%, pulling up Asia Pacific as a region to 10.51%.
For the rest, manufacturing growth in emerging industrial economies was just 1.4%.
At a regional level, Africa saw its manufacturing output for the first quarter of 2014 rise only by a marginal 0.71% compared to January to March 2013, and actually fall 0.43% compared to the last quarter of 2013. Latin America also saw subdued growth at 1.45% compared to the corresponding year-ago period, and 1.10% compared to the previous quarter.
For the developing and emerging economies, at a country level, manufacturing output in Argentina fell by 1.8%, in Brazil by 0.2% and in India by 1.6%; while moderate growth of 3.8% was observed in Indonesia, 2.5% in Mexico and 1.6% in South Africa.
However, developing and emerging industrial economies are leading the production of traditional goods. For instance, the production of textiles rose by 5.8% in developing and emerging industrial economies. The highest growth was observed in Egypt, Macedonia and South Africa with 14.2%, 18.2% and 15.1%, respectively.
The major risks to a recovery of these economies relate to the reversal of capital flows, as an external factor, and the rise in the cost of production as an internal factor, the authors summarized.
Meanwhile, industrialized countries account for almost two-thirds of world manufacturing value added and growth in these economies has significant impact on global manufacturing as output rose by 3.3% in industrialized countries.
“The base of current growth in industrialized countries has considerably broadened,” the report’s authors noted, adding that manufacturing output rose in all industrial sectors, including traditional sectors as food manufacturing and textiles.
While recovery was only visible in North America in the first half of 2013, it is now evident in all three industrialized regions – East Asia, Europe and North America, noted the report.
In all, developed economies were on an upturn, as the manufacture of machinery and equipment rose by 6.4% in Canada, by 17.7% in Japan, and by 6.0% in the United States. Overall manufacturing output grew by 2.9% in Canada, 8.5% in Japan and 2.5% in the US.
However, the growth in the US was lower than expected, and the giant economy was outstripped by Canada.
Meanwhile, European manufacturing has finally emerged from a prolonged recession with consistent growth in two consecutive quarters.
In the first quarter of 2014, the manufacturing output of Europe rose by 3.1%, mainly on the back of fabricated metal products, machinery and equipment and motor vehicles.
Besides, growth is more broad-based across Europe, as both economies inside and outside the Euro Zone performed well, with the exception of Sweden where output shrank 2.0% and Russia, where it fell by 2.5%.