The story of global manufacturing production continues to be China’s growth, which is the conventional wisdom. The conventional wisdom however is not correct in the belief that the USA has failed. China shot past the USA, which dropped into 2nd place, but the USA still manufactures a great deal and has continually increased output (though very slowly in the last few years).
The story is pretty much the same as I have been writing for 8 years now. The biggest difference in that story is just that China actually finally moved into 1st place in 2010 and, maybe, the slowing of the USA growth in output (if that continues, I think the USA growth will improve). I said last year, that I expected China to build on the lead it finally took, and they did so. I expect that to continue, but I also wouldn’t be surprised to see China’s momentum slow (especially a few more years out – it may not slow for 3 or 4 more years).
As before, the four leading nations for manufacturing production remain solidly ahead of all the rest. Korea and Italy had manufacturing output of $313 billion in 2011 and Brazil moved up to $308 are in 4-6 place. Those 3 countries together could be in 4th place (ahead of just Germany). Even adding Korea and Italy together the total is short of Germany by $103 in 2011). I would expect Korea and Brazil to grow manufacturing output substantially more than Italy in the next 5 years.
The country supposedly growing their manufacturing the most in the last 10 years is Russia, up 375%. Frankly I don’t believe that data accurately reflects reality. China is next, up 346%. Followed by Indonesia up 345.6%, Brazil up 280%, India up 255%, South Korea up 163% and then Germany up 95%. The figures are all in current USD, inflation alone would result in an increase of about 27% for the period. The slowest gains in manufacturing output are the UK (up just 21%), USA up 32%, Japan up 33% and France up 43%.
Of course, when looking at economic data all sorts of questions can be raised. My not believing the Russia data, for example. Also even accepting an inflation of 27% for the economy as a whole, for many manufactured goods that may not be very accurate. And using US $ for everyone creates some issues based on foreign exchange movements (so a country could actually produce 10% more in their own currency but if that currency fell 20% against the $ then they would show a 10% decline in manufacturing output). The data has weaknesses that have to be understood. Even so the data is useful and provides a very good long term picture of what is really going on economically.
I actually believe the USA’s 10 year figure is a discrepancy, but we will see how things shape up in the next 5 to 10 years. The USA had some very bad years from 2006 to 2009.
I expect in the next 10 years Indonesia and Brazil will do quite well and have a great shot at being among the tops in this group of the 14 leading manufacturing countries. China will likely do well, but I think growth will slow and it may well fall back from the lead (though likely remain somewhat near the top). India could do well, but their continued failure to address infrastructure and corruption problems make it very challenging. If they successfully addressed those they could easily be in the lead. I doubt they will though, so I expect them to be held back. Mexico has a chance to do very well, though they also have problems to deal with.
A bunch of the leading countries will struggle to grow significantly. The USA, Japan, Germany, Italy, Russia, France, UK, Spain and Canada are not likely to do fantastically. I would expect the USA to be near the top of this group. That leaves Korea as a country I think can outperform all in the previous sentence but to have trouble keeping up with any of the countries in the previous paragraph that don’t create problems for themselves.
Related: Manufacturing Output as Percent of GDP from 1980 to 2010 by Country – Manufacturing Employment Data: USA, Japan, Germany, UK and more, 1990 to 2009 – Top 15 Manufacturing Countries in 2009 – How Accurate is Manufacturing Data? – Top 12 Manufacturing Countries in 2007