The Global Crisis of Investment Goods

Worldwide exports of electrical engineering products, machinery, tools and equipment, industrial plants have been falling for 4-5 quarters in a row

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Slowdown Metal industry Conjuncture Global demand Check performance Global economic trends

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The negative phase of the investment cycle intensified in early 2020, but was already underway in 2019

The analysis of world trade, updated to the first quarter of 2020 (see ExportPlanning World Trade Datamart), reports in the last 4-5 quarters a generalized drop in world exports for electrical engineering products, industrial machinery and plants, industrial tools and equipment, tools and equipment for ICT and services, industrial plants.

The contraction is particularly relevant for machinery, far less pronounced for industrial plants.

In particular, the negative phase of the investment cycle (measured in terms of distance between the maximum and minimum point of world exports at constant prices) can be described as follows, at the industry level:

  1. Machines and industrial plants1
    • Over -16%
    • 5 of the last 6 quarters on a downward trend (in particular, Q1-2020 was down by 5.1%)
    It should be noted that at the beginning of the decade the reduction in world exports of this industry had been even more prolonged, lasting for 7 consecutive quarters, but registered a more contained loss (about -12%).
  2. Electrical engineering2
    • Over -13%
    • Last 5 quarters on a downward trend (the last quarter was the worst, with a drop of over 5%)
    The current negative cycle has already equalled the previous one of this industry (dating back to 2015): also in that case, world exports had decreased for 5 consecutive quarters, but with a relatively less pronounced overall decline (less than 11%).
  3. Tools and equipment for ICT and services3
    • Above -11%
    • Last 5 quarters down by 7. 3%
    The current negative cycle of this industry is, however, even less intense than the previous cycle (2014-2016), in which world exports declined for 8 consecutive quarters, with an overall reduction close to -13%.
  4. Industrial tools and equipment4
    • Close to -11%
    • Last 5 quarters down (particularly significant is the reduction in Q1-2020, by 5%)
  5. Industrial plants5
    • -6.8%
    • Last 4 quarters on a downward trend (in particular, the last three months were down by 4.4%)
    It should also be noted that, in correspondence with the previous crisis (period 2015-2016), world exports of this industry were marked for 7 consecutive quarters, with a cumulative reduction close to 10%.
Quarterly dynamics of world exports: Y-o-Y % changes at constant prices
World Exports of Machinery: % Y-o-Y changes at constant prices World Exports of Electrical Engineering: % Y-o-Y changes at constant prices
World Exports of ICT and Service Equipment: % Y-o-Y changes at constant prices World Exports of Industrial Tools and Equipment: % Y-o-Y changes at constant prices
World Exports of Industrial Plants: % Y-o-Y changes at constant prices World Exports of Automotive and Agricultural Equipment: % Y-o-Y changes at constant prices
Source: ExportPlanning - Market Research - Analytics, World Trade Datamart

The case of the Cars, transport and agriculture equipment6 should be noted for its dynamics of prolonged weakness in world exports. In this case, the effects of uncertainty linked to the technological transformations taking place in the automotive supply chain are added to economic factors. Overall, the intensity of the reduction is in any case similar to the other industries considered above, equal to approximately 12 percentage points, but with a less sharp fall: the last quarter considered (January-March 2020) marks, moreover, a YoY decrease of almost 8%.

Inevitable new (deep) fall in Q2-2020:
which prospects for the second part of the year?

The second quarter of 2020 will most likely show a further sharp decline in global exports of capital goods, in line with the lockdown phase of the major Western economies.
The trend of the second half of the year and, more generally, the ways of reversing the investment goods cycle will crucially depend on the shape of the global demand crisis: hopefully a "V", thanks to the possibility of a "rebound" effect on global demand from the normalization of the health emergency, a "U" or, in the worst case scenario (as happened in the Great Recession started in 2008), a "L": see the article "The form of the global demand crisis will be in V, U or L ?".


1) See the list of the sectors inclueded in this industry in the related industry description.
2) See the list of the sectors inclueded in this industry in the related industry description.
3) See the list of the sectors inclueded in this industry in the related industry description.
4) See the list of the sectors inclueded in this industry in the related industry description.
5) See the list of the sectors inclueded in this industry in the related industry description.
6) See the list of the sectors inclueded in this industry in the related industry description.