The 2020 Mid-Year Economic Update_long

European Industrial Outlook: Eurozone Activity Weak in 2014

MAPI's European Industrial Outlook forecasts muted activity in 2014.

Economic activity in the Eurozone remains weak despite the fact that the region came out of a technical recession, according to the Manufacturers Alliance for Productivity and Innovation’s European Industrial Outlook, a report covering 14 major industries and 13 major economies.

MAPI senior economist and report author Kris Bledowski, Ph.D., forecasts industrial production growth of more than 3 percent in 2014 in only four of the Eurozone countries —the Czech Republic, Germany, Poland, and Switzerland. Overall GDP growth for the Eurozone is forecast to be between 0.5 and 1 percent this year.

“Industrial production fell in four out of the last six months of 2013, unemployment topped 12 percent, and inflation is undershooting the ECB’s target by a full percentage point,” Bledowski said. “Domestic demand has contributed virtually nothing to growth and the demand for European exports is weakening. With the private sector expected to deleverage further and tight fiscal policies remaining in place, the outlook for 2014 is muted.”

Industrial production is expected to inch up less than two percentage points in the Eurozone in 2014. Any improvement in demand for Europe’s manufactured products will be aided by a jump in fixed investment. According to the report, higher capacity usage, coupled with better access to external finance and gradually improving balance sheets, should spur capital formation. Conversely, personal consumption, residential investment, and to a lesser degree government demand will lag behind.

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