Global trade tensions led to a contraction of 1 percent in industrial production in 2019. And they will also have a negative impact in 2020, just like the flattening economy and the nitrogen and PFAS issues. The economic bureau of ABN AMRO predicts this on Thursday.
For example, the metal industry will have a difficult year, with nitrogen and PFAS problems causing a drop in demand of 2 percent. The transport industry is also affected by the falling demand for construction machinery and equipment, resulting in a decrease of 2 percent. For the same reason, the demand for electrical engineering would also decrease by 2 percent.
Productions continue to fall worldwide, and negative sentiment among entrepreneurs is also taking its toll. ABN AMRO expects the industry to shrink 1.5 percent this year. The number of export orders is decreasing, among other things, which causes the negative prediction.
The economic bureau does think that trade tensions will decrease this year, partly due to the agreements that the United States and China have in the pipeline. The settlement of this trade dispute would be “decisive for a possible recovery of production”.
However, according to the agency, the recovery of industrial production does not occur before 2021. ABN expects a deterioration in the first and second quarter, after which recovery can begin. Then the Brexit should work out well, writes Albert Jan Swart, sector economist Industry. The biggest risk, however, is a new escalation of the trade war between China and the US.
Yet Swart is optimistic: “Fortunately, most industrial companies have had some very good years before 2019, which means they have a lot of fat on their feet.”