The global economy expanded slightly more vigorously in the second half of 2016 than at the start of the year. The political landscape has changed considerably over the past six months, which could have far-reaching consequences and cause major uncertainties for the global economy over the coming years.
There was a slight overall slowdown in global economic expansion in 2016 compared with the previous year. Over the year as a whole it expanded by 3.1 percent, a lower rate than had been expected (3.4 percent). The economy in the eurozone grew by 1.7 percent in 2016, as expected. In Germany, the moderate level of growth was increased from 1.5 percent to 1.7 percent. The German economy thus remained on a course of expansion amid an unsettled international environment. The level of orders in German industry showed an upturn again towards the end of the year, and orders of intermediate and capital goods in particular accelerated. Capital utilisation in manufacturing sector reached a five-year high of 85.7 percent.
However worldwide demand for capital goods remained weak. The German mechanical engineering sector has to sign off 2016 as another year where revenue flatlined. Structural change in China, ailing emerging economies, continuing low raw material prices and geopolitical risks have been a burden on the global economy for quite some time now. New uncertainties appeared in 2016 as a result of the Brexit vote in the United Kingdom and the outcome of the elections in the USA.
|Source: International Monetary Fund, World Economic Outlook, January 2017|
The VDMA (German Engineering Federation) again had to adjust its expectations downwards in the past year. The federation had forecast zero growth for the German mechanical engineering industry for price-adjusted production of machinery and plant. According to VDMA figures, mechanical engineering companies closed their order books for 2016 overall down 2 percent in real terms compared with 2015.
While the level of orders in the machine tool sector and plastic machine area showed a positive year-on-year development at the turn of 2016/2017, sentiment in the printing industry was again clouded.