A global path yielding towards recovery
EVEN BEFORE the coronavirus disease 2019 (COVID-19) pandemic began to plague industries from the past year, significant issues such as the financial crisis of 20082009 and the ongoing trade and tariff tensions had impacted manufacturing.
By early 2020, when the pandemic limited business operations and closed international borders, critical impacts were felt on the manufacturing sector. China and other East and Southeast Asia countries experienced the effects by the first quarter while the rest of the world recorded production losses in the second and third quarters.
A year over in the COVID-afflicted world, global manufacturing production is on its path to recovery in the first quarter of 2021, according to the latest United Nations Industrial Development Organization (UNIDO) quarterly manufacturing report. The speed of recovery, however, varies on country and industry groups.
After the 6.8% drop in the manufacturing output due to the early impacts of COVID-19 a year ago, UNIDO recorded an annual output growth of 12.0% in the first quarter of the current year.
In the industrialized economies, the agency reported a 1.5% growth in the said quarter compared to the same period of 2020 when viewed at a glance. But looking more closely, not all countries have seen an increase based on their manufacturing outputs.
Year over year, the Northern American region still declined by 0.6%. Yet in the previous quarter, it recorded a 2.8% drop. “This development is primarily linked to the manufacturing activity in the United States, where output fell by 0.6% and 2.6% in the last two quarters, respectively,” UNIDO’s report read.
Meanwhile, manufacturing outputs of industrialized economies in the Asia and Pacific (APAC) region have surpassed their production levels before the pandemic, recording an increase of 2.7% in the first quarter of 2021.
Although Japan, the region’s largest manufacturer, has recorded a 1.3% output reduction in the said quarter, the growth figures of Taiwan (13.6%), Singapore (9.7%), and the Republic of Korea (5.6%) have counterweighed the decline. Such a significant rise in output is attributable to the positive performance of the computer and electronics, and the pharmaceutical industries.
Industrialized countries in Europe also increased their manufacturing production by 2.6% in the first quarter of 2021. Ireland notably registered two-digit growth rates for the last two quarters. Italy, France, and Spain grew their outputs by 9.0%, 1.7%, and 1.5%, respectively. Germany, however, has a decreased output of 1.8%.
The United Kingdom, now a nonEuropean Union (EU) industrialized economy, has an output drop of 1.6% in the same quarter, following its 2.7% decline in the previous quarter. “Uncertainties regarding Brexit and the future relationship between the United Kingdom and the EU persist and could affect the performance of the country’s manufacturing sector in the post-pandemic era,” UNIDO noted.
Somehow akin to the industrialized economies, developing and emerging industrial countries also logged indications of recovery in their manufacturing productions at varying rates in the first quarter of 2021, as shown on the group’s 3.2% increase. This figure does not include the outputs from China, the largest manufacturer globally.
UNIDO’s statistics presented China separately due to its size and specific characteristics of its economy. “Sustained high growth rates over the past several years have rapidly been transforming China into an industrialized economy,” the organization said.
In the latest seasonally adjusted figures, China’s manufacturing sector, including most of its industries, reported a year-overyear increase rate of 38.2% during the first quarter of 2021. “It remains uncertain, however, in what direction China’s export-oriented manufacturing sector will continue to develop in the context of dynamic domestic activity and subdued international demand,” UNIDO also noted.
Looking at the other developing and emerging industrial countries in the APAC region, a 2.5% year-over-year increase in manufacturing output is shown in the first quarter of this year. But a closer observation manifested the differences in the production among the countries. As examples, India, Turkey, and Vietnam saw a 5.5%, 12.7%, and 7.6% growth, respectively. In Indonesia, however, the rate decreased by 1.5%.
Likewise, the output growth in European developing and emerging industrial economies differed from country to country. The group generally accumulated a 1.9% year-over-year increase, with Greece, Romania, and Croatia experiencing output growths of 2.5%, 2.8%, and 5.0%, respectively. But decreases occurred in the Republic of Moldova by 3.0% and in Ukraine by 5.4%.
In the same period, the Latin American region also experienced a 5.4% increase when compared year over year. “It remains unclear whether this is a sign of sustainable stabilization, considering the sluggish growth trends that have been observed in this country group since 2018,” UNIDO added.
The activities in Mexico and Brazil, the two largest manufacturers of the region, made respective 0.4% and 6.6% output rates. An increase in outputs also showed in Argentina (11.7%), Colombia (6.6%), and Costa Rica (4.7%). Chile, the group’s only industrialized country, experienced a 0.5% rise in a year-over-year comparison.
Meanwhile, by the growth estimates based on the limited available data, a slight increase of 0.8% showed in the African region, compared to the first quarter of 2020. Senegal, Rwanda, Nigeria, and Tunisia increased their manufacturing productions by 12.9%, 9.9%, 2.7%, and 2.0%, respectively.
Such varying growth among country groups, UNIDO continued, showed on the industrial groups based on technological intensities.
“In addition to the COVID-19 crisis in 2020, pre-pandemic uncertainties related to rising trade restrictions had a major influence on producers, leading to a gradual slowdown since 2018, albeit with varying impacts in different industrial sectors,” the organization explained.
In 2020, UNIDO recorded output decreases of at least 5% in the first quarter and exceeding 10% in the second quarter.
By the first quarter of 2021, medium-high- and high- as well as medium-low-technology industries experienced faster recovery with output growth of at least 10%. The medium high- and high-technology industries significantly gained a 16.8% rise. The low-technology industries, meanwhile, have seen a year-over-year 5.8% growth rate.
UNIDO also reported that in all country groups, the majority of the industries such as computer and electronics, electrical equipment, rubber, and plastic, as well as