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Friday, 31 August 2012

Manufacturing growth rate drops in developing countries as financial instability continues in Europe

VIENNA, 31 August 2012 – A United Nations Industrial Development Organization (UNIDO) report on world manufacturing production in the second quarter of 2012 shows that the growth rate of manufacturing output in developing countries has dropped to the lowest level since the beginning of 2011.  

While manufacturing industry in developing economies largely resisted the effects of financial volatility during the recession of 2008–2009, the ongoing second recession of the world economy since 2010 has equally affected both industrialized and developing countries. UNIDO predicts that the growth of manufacturing value added (MVA) in developing countries will slow to 4.5 per cent in 2012, down from 5.4 per cent in 2011.

Among the industrialized countries, there are positive developments in North America and East Asia. The MVA of North America is expected to grow by 1.7 per cent in 2012, while East Asia’s industrial production could grow by 4.1 per cent.  However there are concerns that the impact of declining MVA in Europe may spill over to these regions. Prolonged instability in the Euro-zone countries has caused negative spillovers in other European countries, and manufacturing output has fallen in Croatia, Denmark, the Russian Federation, Sweden, and the United Kingdom. The MVA of European countries as a group is expected to decline by 1.7 per cent in 2012.

The prolonged crisis in Europe and uncertainty about growth prospects in the US have negatively affected industrial production in developing countries. The decline in demand in external markets has slowed the growth of export-oriented manufacturing industries in many developing countries, and, in some of them, domestic demand, too, has dropped due to the perceived growth uncertainty at the global level.

During the second quarter of 2012, manufacturing growth slowed throughout the developing world. China’s growth rate declined to 9.5 per cent compared to 12.7 per cent in the first quarter. In Brazil, industrial production dropped by 4.8 per cent, and in India, by 0.7 per cent. Among other developing economies, manufacturing output dropped in Argentina, Colombia and Peru.

Negative growth was also observed in developing countries in North Africa. In Egypt, manufacturing output fell sharply, by 9.6 per cent, and in Tunisia, by 7.5 per cent.

The UNIDO report also presents growth estimates by manufacturing sector. Due to the decline in demand in industrialized countries, production growth of consumer goods, especially wearing apparel and consumer electronics, has slowed or declined in developing countries.

Read the full report, World Manufacturing Production; Statistics for Quarter 2, 2012

UNIDO’s quarterly production estimates provide information about the current status and growth trends of world manufacturing output. Annual data is published in the International Yearbook of Industrial Statistics.

UNIDO maintains an international industrial statistical database in accordance with the mandate of the United Nations Statistics Commission. Data is disseminated through report publications and CD products, and is available online.

For more information, please email:

Shyam Upadhyaya
UNIDO Chief Statistician
E-mail