World manufacturing growth is expected to remain low in 2016 due to weakened financial support for productive activities, according to a report released yesterday by the United Nations Industrial Development Organization (UNIDO).
The report states that, with financial uncertainty still looming across Europe, foreign direct investment has not yet reached the 2007 pre-crisis level.
According to UNIDO, world manufacturing output is expected to increase by 2.8 per cent in 2016. The current trend indicates that, in contrast to recent years, there will be no breakout from the low-growth trap in 2016. Manufacturing production is likely to rise by 1.3 per cent in industrialized countries and by 4.7 per cent in developing economies.
By the end of 2016, the growth rate performance of China, the world’s largest manufacturer is likely to further decline from last year’s 7.1 per cent to 6.5 per cent this year. Similarly, downward growth rate trends are expected in Japan, Europe, and the United States.
The report contains expected annual growth rate estimates for 2016, as well as observed growth rates for the second quarter of this year. According to UNIDO, lower industrial growth rates pose a challenge for the implementation of Sustainable Development Goal 9, which aims to significantly raise the share of manufacturing in the economies of developing countries.
World manufacturing output rose by 2.2 per cent in the second quarter compared to the same period in the previous year. Most of the growth was contributed by developing and emerging industrial economies where manufacturing output rose by 4.9 per cent. In industrialised countries growth was marginal at 0.2 per cent.
In Europe, the uncertainty following the Brexit affected the growth rate performance in manufacturing in the second quarter of 2016, below 1.0 per cent for the first time since 2013. Lower growth was also observed in the Russian Federation and the United States, where manufacturing output rose at the marginal rate of 1.0 per cent and 0.3 per cent respectively.