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The latest Manufacturers Alliance/MAPI Quarter Economic Forecast predicts that inflation-adjusted gross domestic product (GDP), which grew by 1.3% in 2008, will decline 2.1% in 2009 before rebounding to 2.2% growth in 2010. The GDP forecast for 2009 in the current MAPI report is double the previously anticipated 1% decline for this year projected in the November 2008 release.
We are in the midst of a very severe global recession in manufacturing which looks to be the worst recession since 1973-74 in terms of depth and duration, said Daniel J. Meckstroth, MAPI chief economist. "Manufacturing did not create the problem but is paying the price for the problems that began in the financial markets."
MAPI economists believe it may be late in 2009 or in 2010 before the economy will stabilize.
Manufacturing production growth declined by 2.5% in 2008. It is likely to fall significantly further in 2009, with expectations for a 9.2% decline this year. The previous MAPI report had forecast production to decline by 4.2% in 2009. MAPI forecasts some relief in 2010 with manufacturing production anticipated to grow by 2.5%.
Production in non-high-tech industries is expected to decline by 8.4% in 2009 before increasing by 2.2% in 2010. Computers and electronics products sector, normally a consistent growth industry, will also see a drop-off this year. High-tech industrial production is expected to decline by 9.6% in 2009, a fall from 6.6% growth forecast in the November 2008 report. A rebound, though, of 5.9% growth is expected in 2010.
The forecast expects industrial equipment expenditures to decline by 19.2% this year and to further decline by 6.4% in 2010. The report calls for a 29.8% decline in transportation equipment spending in 2009 followed by a 53.3% increase in 2010.
Spending on non-residential structures is expected to retrench over the next two years, declining by 16.3% in 2009 and by an additional 14.9% in 2010.
Exports and imports will both take a hit in 2009, according to MAPI. After increasing by 6.5% in 2008, inflation-adjusted exports should decrease by 8.3% in 2009 before experiencing 1.2% growth in 2010. Imports are expected to decline by 10.8% this year and to increase by 7.1% next year.
The MAPI forecast anticipates unemployment to average 8.5% in 2009 and 9% in 2010.