The latest report from the World Economic Outlook (WEO) report from the IMF forecasts global growth from an estimated 2.9 percent in 2019 to 3.3 percent in 2020. The growth for 2021 is, even more, promising at 3.4 percent.
The IMF forecasts global growth to average 3.3 percent in 2020, up from 2.9 percent in 2019 – and to rise to 3.4 percent in 2021. Compared to the October WEO forecast, the estimate for 2019 and the projection for 2020 represent 0.1 percentage point reductions for each year while that for 2021 is 0.2 percentage point lower.
Trade policy uncertainty, geopolitical tensions, and idiosyncratic stress in key emerging market economies continue to weigh on global economic activity—especially manufacturing and trade—in the second half of 2019 according to IMF. Intensifying social unrest in several countries posed new challenges, as did weather-related disasters—from hurricanes in the Caribbean, to drought and bushfires in Australia, floods in eastern Africa, and drought in southern Africa.
What does this mean for manufacturing? Perhaps in developing a 2-5 year marketing plan, it would be prudent to consider targeting higher growth markets for exports. Well, market sentiment has been boosted by tentative signs that manufacturing activity and global trade are bottoming out. Moreover, the broad-based shift toward accommodative monetary policy, intermittent favourable news on US-China trade negotiations, and diminished fears of a no-deal Brexit, leading to some retreat from the risk-off environment that had set in at the time of the October WEO. However, few signs of turning points are yet visible in global macroeconomic data.
As overall growth in the US dollar continues to remain, starting now towards diversifying sales channels to include higher growth international markets may position manufacturers to take advantage of exchange currency and demand from abroad.