From the perspective of global manufacturing, in 2024, the manufacturing industry in the United States and Europe will enter a short period of mild recession, while there are tentative signs of recovery in other regions.

According to Interact Analysis’s latest Global Manufacturing Output Tracker (MIO), with the right fiscal policies in place, manufacturing could recover in some regions by 2025.

Compared with the second quarter, the MIO indicator’s forecast for global manufacturing in the third quarter is little changed. 2024 will still be a difficult year for many regions, including the Americas and Europe, but things are expected to improve by 2025. In MIO’s forecast, the form of next year is more similar to a mild recession, the hit to the manufacturing industry will not be too severe, as long as governments implement the right policies to stimulate economic growth and avoid triggering large-scale inflation, the global manufacturing industry is expected to soon out of the recession cycle.

Compared to the second quarter forecast, this update expects a slight expansion of the decline in 2024, while our forecast for a rebound in growth in 2025 is lowered due to market concerns that the contraction trend in 2024 is likely to continue into early 2025.

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China is crucial to the continued growth of global manufacturing. Although China’s manufacturing output growth in 2023 has been slightly revised down to 3.2%, the Chinese economy is expected to gradually shake off the slow growth trend at the beginning of the year and continue to recover. As the effects of the Chinese government’s stimulus policies gradually become apparent, our forecast for China’s manufacturing growth in 2024 has been revised up slightly from 2.9% to 3.0%. Given China’s important position in the global manufacturing industry, this upward revision of the forecast will help support global manufacturing growth. Without China’s participation, global manufacturing output would have contracted by -1.8 per cent instead of growing by 0.3 per cent.

The Interact Analysis will also keep a close eye on the impact of interest rates and economic stimulus policies on the global economy and its manufacturing sector, as there is a real risk of stagflation or lack of demand.

In the third quarter Global Manufacturing Output Value (MIO) update, we extended the MIO forecast period by one year to 2028 and added a forecast for Singapore, bringing the MIO indicator to a total of 45 countries, 72 manufacturing end-user industries, 30 machinery industries, and 30 manufacturing end-user industries. Two types of participants in the supply chain are widely involved (the machinery industry and end users in manufacturing). The latest version is the most extensive forecast to date.