Global Demand for Industrial Goods picks up further

Expenditure on equipment, machinery and industrial plant is one of the most significant components of business investment. More specifically, world imports of these types of goods well approximate investments linked to process and product innovations and investments in production expansions.
The dynamics of world trade in these products can therefore provide an interesting measure of the current economic situation of business investment policies around the world, in wake of the Covid-19 crisis.

The availability of ExportPlanning data for the first half of the year shows that global demand for equipment, machinery and industrial plant, measured in quantity - i.e. net of price changes - seems to have recovered the expansionary phase that was interrupted at the end of 2018, as protectionist tensions grew on the US-China front. The relative slump recorded in 2020, although relatively contained compared to what happened during the Great Recession, has in fact come on top of a previous weakness.

World demand for industrial goods in quantity: y-o-y change

Source: ExportPlanning

Since H2-2020, there has been evidence of a turnaround in global demand for investment goods: for the first time since Q4-2018, it has returned to positive territory. Moreover, latest data on H1-2021 certify a strong intensification of growth trend: imports of investment goods marked a +12% increase in quantity compared to H1-2019, +9% if compared to H1-2018, the last phase of expansion of the sector.

The fastest growing areas

The following graph shows the major countries in relation to the dynamics of imports of equipment, machinery and plant (in quantity) recorded in 2020, as well as the change marked in H1-2021 compared to H1-2019. This graphical representation makes it possible to identify the main areas driving the new expansive phase of demand.

Imports of equipment, machinery and plant in quantity by Country

Source: ExportPlanning

Asia

In Asia, the economies of Taiwan, China, Vietnam and Hong Kong are strongly supporting global demand for equipment, machinery, and facilities, growing just above the world average of 12% and performing relatively resiliently through 2020.
Japan, Singapore and South Korea record instead a less pronounced increase; they instead appear to be consolidating the already positive results of the previous year. The ASEAN economies of Indonesia, Thailand and Malaysia grew less markedly and seem to have been partially penalized by the recrudescence of the virus experienced in recent months.

Europe and North America

A very positive situation for all the main European economies which - on the one hand - have shown a good resilience in investments during 2020, and - on the other - are characterized by a significant and larger increase than the world average. The best results are recorded for Germany and Poland, but also Italy shows a marked increase.
On the other hand, the North American area shows heterogeneous results: if the United States are particularly driving for the overall world result, with an 11% growth on H1-2019, the recovery of the demand for equipment, tools and plants is still very slow for the Mexican economy.

Looking at the sectors, the undisputed protagonist of the new season of increases is Electronics. For all the international economies analyzed, ICT components and equipment represent the item with the greatest growth compared to the pre-crisis period, documenting the ever-increasing strategic importance of digital transformation and of the new forms of work.
Despite relatively smaller increases, strongly positive signals also involve investments in Industrial Tools and Machiney, which are in largely positive territory compared to 2019; particularly interesting is the growth in US demand for Food and Packaging Machinery.