Growth of factory production is expected to slow-down across the globe in the coming months, ending the year slower than in 2010, according to a report.
The expected slower growth is due to a debt crises in the West and associated market uncertainty, according to the UN Industrial Development Organization’s (UNIDO) second-quarter report, published on 1 September.
According to UNIDO, global manufacturing production is not bouncing back from the effects of the global financial crisis as quickly as hoped.
“Beginning-of-the-year expectations for sustained recovery from the 2008 financial crisis were dampened by a reduction in the dynamism of global private consumption and international trade during the second quarter, fueled by further tightening of fiscal policy [and] concerns about sovereign risks in some European countries leading to financial market instability and rising inflation,” the report said.
Growth of manufacturing value added (MVA) is expected to slow to 5.1% by the end of the year, down from 5.3% at the same time last year.
According to UNIDO, developing economies are bringing these figures down, as the global economic troubles catch up with markets in the EU and United States.
The survey is new this year, done on a quarterly basis. It gathers responses from countries monitored by the UN Statistics Division.
The report says developing economies will outperform industrialised markets by the end of this year, finishing 2011 with 8.4% MVA growth compared to last year’s 9.4%.
Interestingly, China is expected to lead this growth, with 11% this year compared to 12.2% in 2010.
Economies in East Asia, North America and Europe are expected to expand MVA by 3.1%, compared to 3.4% last year.
“The main drivers of manufacturing output [for developing economies] have been business investments and exports and, in some countries, increasing consumer demand,” UNIDO said.
“Consumer spending does not seem to offset the winding down of stimulus packages, fiscal consolidation and high commodity prices of the previous quarter.
“The reduction in motor vehicle production was mainly the result of the closing down of many Japanese supplier and assembly factories following tsunami disaster.”