Despite short-term challenges, the long-term outlook for the global manufacturing industry is positive, according to market intelligence firm
Interact Analysis. The company’s latest quarterly
Manufacturing Industry Output (MIO) Tracker report forecasts marginal growth of 0.6% for 2024, with stronger growth expected in 2025 and beyond. However, the growth forecast for China’s manufacturing output has been revised down slightly to 2.3% for 2024.
Europe as a whole is bracing itself for a difficult year in 2024, with the manufacturing sector expected to face significant downturns across multiple key economies. The region is grappling with the after effects of energy crises, supply chain disruptions, and the ongoing economic fallout from geopolitical tensions, particularly the war in Ukraine.
As a result, Europe’s manufacturing output at a country-level is projected to either stagnate or decline, making it one of the weakest performing regions globally. According to the report, the anticipated downturn highlights the region's vulnerability to external shocks and underscores the urgent need for strategic investments in energy independence and industrial modernisation to ensure longer-term resilience.
Meanwhile, the Asia-Pacific region, particularly South Korea, Singapore, and Taiwan, are poised to play pivotal roles in the global recovery for the manufacturing sector. Following on from a challenging 2023 marked by supply chain disruptions and reduced demand, these three countries are expected to experience a significant resurgence as the semiconductor industry regains momentum. Meanwhile, China remains, as expected, on a growth trajectory, albeit with its economic expansion slowing down.
China’s critical roleIn contrast, the USA is not expected to experience as severe a downturn as the European manufacturing sector. This is in part due to a high amount of investment in infrastructure. Political changes, however, like the upcoming presidential election, may impact the country’s growth prospects. While the global manufacturing industry is projected to see a slight increase in output, the picture changes significantly when China is excluded from the analysis. Without China, global manufacturing output is expected to decline by 0.9% in 2024, underscoring the critical role China plays in the global manufacturing ecosystem.
The machinery manufacturing sector is predicted to have a more challenging year in 2024. In Europe, particularly in Germany and Italy – two of the region’s largest machinery producers – the sector is forecast to stagnate or even decline. This downturn is driven by several factors, including increased competition from lower-cost producers in Eastern Europe and Asia, high interest rates, inflation stifling investment and the ongoing energy crisis in Germany (a result of the reliance on Russian gas and the ongoing war in Ukraine), which has led to higher production costs.
Despite the many challenges facing Europe, some regions, especially in Asia, may see better performance due to investments in more advanced manufacturing technologies and automation, which are expected to bolster productivity and production for machinery sectors.
Interact Analysis CEO Adrian Lloyd concluded: “We have made several important changes to our forecasts in this edition of the MIO which has meant that every growth curve is slightly different. However, on the whole our outlook from 2025 to 2028 is slightly better than in the last quarter.”