Outlook for Key Customer Industries

• Weaker growth expected in global industrial production

Overall, we expect global industrial growth to be weaker in 2019, at 2.7% (2018: +3.2%). The trajectory should slow in both the advanced economies as well as in the emerging markets.

We expect the transportation industry to return to growth after a slight decline in production in the previous year. In the E.U., automotive production will presumably decline again slightly; a slight decline in western Europe should contrast with moderate growth in the eastern E.U. countries. For North America, we are again forecasting weak growth after the slight decrease in 2018. In Asia, too, we anticipate a slight recovery overall, as the expiry of the tax incentives will no longer be felt in China and economic stimuli should take effect. Dynamic growth is again forecast for India. In Japan and South Korea, automotive production should return to positive territory in 2019 after contracting in the previous year. By contrast, growth in South America will likely decline following the strong recovery effects in prior years.

In the energy and raw materials sector, we anticipate slightly weaker production growth for 2019. The main driver is the lower growth rate forecast for utilities – which accounts for over 40% of value added in the sector – compared with 2018. This was partly attributable to the extraordinary weather conditions in 2018, which led to unusually high electricity and water consumption.

We anticipate largely stable global growth in the construction industry with wide regional variance. Construction in western Europe will soften somewhat, partly due to capacity bottlenecks (Germany) and partly to the limitations of subsidy programs (France). Private sector construction activity in the United Kingdom is expected to remain sluggish due to macroeconomic uncertainty. By contrast, the construction industry in eastern Europe should remain dynamic with strong growth rates, although weaker than in the previous year. We are again seeing a weak development in the United States against a backdrop of rising mortgage rates and construction costs, while growth in Asia is expected to remain stable at a high level, especially in infrastructure. In South America, we anticipate stronger growth in line with the ongoing economic recovery in Brazil.

Growth in consumer goods production should remain stable. Although global GDP growth – the most important demand driver – is likely to decline slightly, demand for consumer goods should stabilize on the back of rising private incomes. The expected regional differences in growth should follow the GDP trends described above.

The electronics industry will continue to benefit from increasing digitalization and automation, posting the highest growth rates of all customer industries. Production is concentrated in Asia and North America. However, growth is expected to weaken in both Asia and the United States. Overall, this will lead to a significant slowdown in global growth.

We continue to forecast above-average growth in the health and nutrition sector, albeit slightly weaker than in the previous year. The expected decline in growth in the food industry is largely in line with the development of GDP. The pharmaceutical industry will presumably see a stronger decline in growth. Base effects play an important role there, since value creation in a number of countries – including Germany – rose exceptionally strongly in the previous year due to the introduction of new, high-value medications.

We expect stronger growth in agricultural production in 2019 compared with the previous year after 2018 yields were negatively impacted by the unusual dry period in central and eastern Europe, parts of North America as well as in Argentina and South Africa.