Letter IEDI n. 1246—Global industry: low dynamism in Q3'23
The most recent quarterly report published by UNIDO (United Nations Industrial Development Organization) shows that global manufacturing remained flat, but not without signs of further deterioration in Q3'23, under the influence of developed countries and without the mitigation provided by China in the previous quarter.
In Jul–Sep'23, global manufacturing output registered a variation of +0.1% in relation to the previous quarter, after adjusting for seasonal effects. With this result, we have already had four quarters of zero or almost zero growth in world production in this comparison: +0.2% in Q4'22, 0.0% in Q1'23 and +0.2% in Q2'23.
In relation to the same period of the previous year, world manufacturing presented a positive rate, but also very low: +0.4%, after growing +2.1% in Q2'23. It should be remembered that the figure for the previous quarter resulted, especially, from the low basis of comparison in China, as discussed in Letter IEDI n. 1231.
The branches of greater technology intensity, notably the automobile industry (+7.5% versus Q3'22), other transport equipment (+6.7%) and electrical equipment (+4.6%), by expanding more vigorously, prevented an even more modest result for the sector as a whole in the world.
High-income industrialized economies have been the main brake on industrial production. Compared to the immediately previous period, the industry of these countries declined 0.8%, a non-negligible deceleration in relation to the already weak result of Q2'23 (+0.1%). Compared to Q3'22, the decline intensified: -2.4%, after -1.6% (Q1'23) and -1.5% (Q2'23).
From a regional point of view, the performance of this group of countries can be seen in the figures for Europe and North America. European industrial output fell 1.9% between Q2 and Q3'23. In North America, the rate, although also negative, was much less intense: -0.1%. Compared to Q3'22, in turn, the industry in Europe fell 1.7% and in North America it registered -0.8%.
The group of middle-income industrialized countries, including China, varied +2.8% against the same quarter of 2022. When we exclude China, however, manufacturing output in Q3'23 increased 1.0% only, on the same basis of comparison. In relation to the previous quarter, the result was +0.5%, after +1.0% in Q2'23 for this group of countries except China.
The regional analysis suggests that the expansion in middle-income industrialized countries, without considering China, was not due to the industry in Latin America and the Caribbean, since its production registered -0.2% against Q2'23 and -1.4% in relation to Q3'22.
Argentina, whose industrial output shrank 3.0% against Q3'22, contributed negatively to the region's result, while Mexico attenuated the situation, presenting a rate of +0.4% on the same basis of comparison.
Brazilian manufacturing, in turn, has not helped much. Its production, as the IEDI has emphasized, has shown poor performance throughout 2023, including the 3rd quarter: +0.1% compared to Q2'23 and -0.9% in relation to Q3'22, always with seasonal adjustment.
Despite this trajectory, Brazilian industry rose in the ranking of 115 countries that the IEDI built from UNIDO's seasonally adjusted quarterly database. Compared to the same period of the previous year, we were in the 58th position in Q3'23, that is, well above the 78th place held in Q3'22.
This improvement in Brazil's ranking, however, was greatly helped by the global industrial slowdown and the significant increase in the share of countries in the red in the last twelve months. In Q3'22, 23% of the countries in the sample had registered a decline in manufacturing output, a share that reached 57% in Q3'23.
In Jan–Sep'23 compared to Jan–Sep'22, we occupied the 64th position, with a 1.2% decrease, in the seasonally adjusted series. We were ranked higher than other important economies such as Japan (-1.4% in Jan–Sep'23, ranking 67th), Italy (-2.2%, in 69th) and South Korea (-7.0%, in 103rd). Mexico was in 33rd place, with industrial growth of +1.6%, Turkey in 19th (+4.6%) and India (+5.0%) and China (+4.3%) in 16th and 20th, respectively.