Industrial production expected to grow by 3 per cent in 2014

News item -

Heavy industry

Industrial output growth continues.Companies keener to invest. Export-focused sectors to benefit the most 

First quarter solid starting point for 2014

After a subdued recovery in the fourth quarter of 2013, Dutch trade and industry got off to a good start in the first quarter of this year, with industrial output growth averaging 3.3 per cent. Other industry indicators are also flashing green for 2014 and 2015: positive economic growth expectations, continued export expansion and a pick-up in capital spending. In addition, ABN AMRO sees global trade accelerating from 2.3 per cent in 2013 to 6 per cent in 2014, boosting business confidence, and our assumption is that industrial market conditions will improve further going forward.

Companies keener to invest

The manufacturing industry is enjoying positive sentiment, with order books steadily filling up. Higher manufacturing activity and growing business confidence should spark increased investment, ABN AMRO reckons. Many companies had been putting off their capital spending since 2012, causing industrial production to contract and loss of demand to put even more of a squeeze on capacity utilisation. The mood turned in the final quarter of 2013 and capital spending has been on the rise since the start of this year. ABN AMRO notes that many businesses are sanguine about order trends in the year ahead, and their take on production capacity, the increased willingness to invest and PMI readings also suggest that capacity utilisation can improve further.

Exports drive industrial production growth

ABN AMRO expects exports to pick up and exporting manufacturing sectors to see production kick ahead of sectors serving the domestic market. Broken down by industry sectors, then, the outlook varies. The chemicals industry, for one, still faces severe pressure on production, sales and margins, making for subdued growth expectations. Prospects for the rubber and plastics industry, by contrast, are very favourable indeed. Base metals recorded the highest production growth of all industry sectors in the first quarter, up 11.2% on the comparable quarter last year, and ABN AMRO is projecting 2014 growth of 4.5% for this particular sector. The metal products industry is still affected by relatively slow demand from construction, although prospects are gradually improving. Companies supplying export-intensive industries should benefit from export growth in 2014 and 2015, and the export outlook is particularly positive for Dutch mechanical engineering companies, key suppliers of Germany. ABN AMRO sees bright prospects for this sector, as the German economy is doing well and export markets are reviving.

Documents

Share

Read more about

Join the discussion

ABN AMRO would like to know your opinion, so below this article you can react to this article via Disqus. By doing so, you agree to the conditions for reacting to articles on our website.

More news items