Outlook for key customer industries
- Marginally higher growth expected in global industrial production for 2017
Global industrial production in 2017 is likely to grow marginally faster than in 2016, at 2.3%. This will be largely attributable to the end of the severe recession in South America, where industrial production should once again show slight growth. In the emerging markets of Asia, growth in industrial production will abate slightly, from 5.5% to 5.2%. In the advanced economies, it will probably remain weak, at under one percent.
We expect an economic slowdown in the transportation sector overall compared with 2016. After three years of solid growth, automotive production is likely to expand only slowly in western Europe, while other branches of the transportation industry could increase their growth rates. A turnaround can be expected in the Russian automotive market. The eastern European automotive market will begin growing again slightly as a result, even if at a low level. In North America, we expect production to stagnate overall. U.S. automotive production will probably shrink slightly; in Mexico, on the other hand, new production-line startups are expected to lead to growth. In South America, we anticipate slight increases in production once again for 2017. Growth in automotive production in China will weaken after the significant gains seen in 2016.
In the energy and raw materials sector, production will presumably grow again in 2017 after stagnating in 2016. However, in Europe and South America, we only anticipate a slight increase in production volumes. Higher raw material prices and the return of stronger demand are likely to provide somewhat faster growth in North America. Production will expand only moderately in the emerging markets of Asia; this will be partly offset by rising imports from Australia.
For the construction sector, we are assuming that the solid growth rates will continue overall. Construction volumes will grow only moderately in western Europe. A sharp increase in Germany and weak growth in France and Italy will contrast with a shrinking market in the United Kingdom. In the eastern E.U. countries, construction activity will recover somewhat after the strong declines of the previous year. However, we still see no increase in activity in Russia. Construction in North America is expected to grow at a moderate pace. We do not anticipate growth impetus in the infrastructure sector in the short term; financing conditions and the volume of a potential, state-funded infrastructure program remain unclear. In China, we continue to expect support measures for the construction industry; growth there will nevertheless abate. We still expect the other Asian emerging markets to show stable growth rates in the construction industry. In Japan, government spending programs should ensure additional investments in infrastructure. The construction market in South America is likely to recover somewhat after the declines of recent years. Given a background of continuing weak oil prices, only a slight recovery in construction activity is expected in the Middle East.
Consumer goods production will presumably grow slightly faster in 2017 than in the previous year. The increase will remain weak in western Europe; eastern Europe will see higher rates, albeit somewhat lower than in 2016. After a slight decline in the previous year, we once again expect modest growth in North America. In Asia, which accounts for over half of the world’s production of consumer goods, growth will probably remain stable at a high level. For South America, we predict consumer goods output will stagnate following last year’s considerable decline.
The electronics industry is likely to expand its production at a similarly strong rate as in 2016. We anticipate stable growth in Asia, the center of the global electronics industry, at a level comparable to that of the previous year. The increase will probably be somewhat higher year-on-year in North America.
In the health and nutrition sector, growth should once again match the levels of recent years. We expect the increase to be slightly higher overall in the European Union and in North America. The fast pace of growth in this sector in Asia will probably let up slightly in 2017. In this industry, too, we expect production to recover in South America.
We expect stable to slightly accelerating growth in agricultural production in 2017, given the low level of agricultural production growth in 2016. Record yields in some regions – of corn and soy in North America and wheat in eastern Europe, for example – contrasted with declining yields in parts of South America and Asia in particular, due to the negative effects of El Niño as well as weaker monsoon rains. Global demand for bioethanol in 2017 will remain dampened by lower prices in the energy sector. Against this backdrop, we expect prices for agricultural raw materials to remain under pressure in 2017.