Global manufacturing bounces back but outlook remains gloomy

Global manufacturing bounces back but outlook remains gloomy

Most countries saw a recovery in manufacturing in the third quarter of 2020, after the collapse experienced in the first half of the year due to the COVID-19 pandemic. China had already returned to growth in the previous quarter and has now exceeded its pre-crisis manufacturing production level. Nonetheless, updated UNIDO forecasts anticipate an unprecedented decline in global manufacturing of 8.7 per cent for 2020.

VIENNA, 7 December 2020 - The social and economic restrictions implemented around the globe to contain the spread of the COVID-19 virus caused a steep decline in manufacturing activity. However, following the easing of some measures in the middle of the year, economic activity has started to bounce back. The latest official statistics for the third quarter of 2020 show a quarter-on-quarter rise of 12.1 per cent in manufacturing output compared to the significant drops of 7.9 and 4.6 per cent recorded in the first and second quarters of the year, respectively. Still, despite the quarterly recovery, output remains 1.1 per cent down on the same period last year (figure 1).

Detailed official data give further insights across regions and show common trends but also differences. For instance, China felt the impact of COVID-19 earlier during the first quarter of 2020, due to an earlier lockdown. But its manufacturing output grew by 8.2 per cent year-on-year during the third quarter, already exceeding its pre-crisis level and reverting to previous growth trends.

On the other hand, most industrialized and developing economies suffered the largest impact of the economic restrictions in the second quarter of the year, but started recovering soon afterwards. In the third quarter, these groups of economies returned to growth, although they have yet to reach their pre-crisis production levels.

Figure 1. Growth of manufacturing output, percentage change compared to the same quarter of the previous year

Global manufacturing bounces back but outlook remains gloomy

Source: UNIDO Statistics based on data from official national sources.

The data also show that the crisis had varying effects on different industries. During the third quarter of 2020, medium-high and high technology industries already registered growth of 0.1 per cent compared to the same period of last year, sustained by positive trends in the production of basic pharmaceuticals (2.6 per cent), computer, electronic and optical products (5.7 per cent) and electrical equipment (4.8 per cent). However, capital and durable goods, such as machinery and motor vehicles, continued to register negative yearly growth rates due to shrinking demand. Low technology manufactures also showed a weaker recovery.

Even if manufacturing activity across most of the world showed signs of recovery in the third quarter, near-term risks remain high. The full impact of COVID-19 is still uncertain, as various industrialized countries experienced a renewed surge in COVID-19 cases in late 2020 and imposed new economic restrictions. Before improved treatment and vaccines become widely available, new waves of the pandemic, and their disastrous impact on people and businesses, cannot be discounted.

Updated UNIDO forecasts for global manufacturing value added point to a yearly drop of 8.7 per cent in 2020. While China's manufacturing sector is expected to reduce its production by only 1.4 per cent this year, the fall in the United States and Europe’s industrialized economies looks likely to reach 11.6 and 14.1, respectively (figure 2).

Figure 2. Annual growth rates of manufacturing value added in constant 2015 US$

Global manufacturing bounces back but outlook remains gloomy

Source: UNIDO Statistics estimated based on data from the UN Statistics Division.

The full report is available here.

All data and analysis based on seasonally adjusted data.

UNIDO regularly releases statistics on current growth trends of global manufacturing at country and regional level. UNIDO maintains an international industrial statistical database in accordance with the mandate of the United Nations Statistics Commission. Data can be downloaded through UNIDO data portal or consulted in official UNIDO publications.

For more information, please contact UNIDO Statistics.