GLOBAL REPORT
SUMMARY. Many factors are pointing to modest growth in Q3 2023. This should lead to total production globally growing at +2.4% in 2023 vs 2022 (it was 2.6% in Q2 2023), and the outlook for the next few years remains positive with growth accelerating from 2025. Apart from Russia and Ukraine, the main countries to show a decline are South Korea, Slovakia, Netherlands. However, the segment picture shows some differences.
Several drivers are influencing the global economic picture.
- Fuel prices eased earlier this year, recently they have grown slightly and are no longer showing signs of easing. This remains a serious issue.
- Supply chains remain constrained and show no signs of improving.
- The war in Ukraine shows no sign of a speedy conclusion, despite recent successes by Ukraine.
- Ukrainian exports of wheat, other grains and fertilizer have declined massively following Russia’s ending on the Grain Deal. Alternative routes (overland, and via the Danube) simply don’t have the necessary capacity.
- Inflation is easing, but it continues to be a major concern for central banks as they consider raising their interest rates. This will pose a risk to economic growth in all regions. Inflation and price increases are putting OEMs in a difficult situation.
- Risk of recession continues in the background for several countries, notably China, USA and Germany, and this could drag other countries into recession.
- Covid is still lingering with global deaths now at over 6.9 million, and a new variant has the medical world concerned.
- Latent demand for machinery keeps building, which is a positive sign.
On a segment basis globally here is a summary of what we see. For details on the Global Economic Outlook and other forecasts, contact your account manager or call us at +1.651.905.8400.
AGRICULTURAL. The Agricultural sector is showing mixed signs with an overall decline in 2023 (-3.7% – previously 4.4% in Q2 2023) but with growth from 2024. The average growth rate to 2028 is +1.7%. The USA is expected to decline in 2024 but remains positive for the other forecast years.
CONSTRUCTION. The global construction equipment sector is expected to decline by -4.8% in 2023 (-2.8% in the previous quarter) and is expected to bounce back slowly in 2024 and for the rest of the forecast period. The USA (-3.5%) is expected to decline in 2023 and also in 2024 (-3.0%) before returning to positive growth.
INDUSTRIAL. TheIndustrial Segment is expected to continue to show positive growth throughout the forecast period with 2023 and 2024 growing at 1.5% (1.6% in Q2 2023) and 1.1% (2.2% in Q2 2023), respectively. The USA is the largest manufacturer in this segment, and it is expected to grow every year during the forecast period except for 2024 where it is forecast to decline by -2.1%.
LAWN & GARDEN. This segment is expected to show growth is expected to remain positive in 2023 but to decline in 2024 before recovering throughout the forecast period. The average growth during the forecast period is expected to be +2.7%. The USA is the largest producer for this sector with almost half of the total volume, so a fall in 2024 (-1.9%), contributes significantly to the 2024 market decline.
LIGHT COMMERCIAL VEHICLES. This segment is expected to remain positive throughout the forecast period with growth of between 2.0% and 5.0%. The top three countries show growth throughout the forecast period with China averaging +4.3%, USA +2.6% and Mexico +3.7%.
MARINE AUXILIARY/MARINE PROPULSION. After strong recoveries in 2021 and 2022, these Marine segments are expected to show modest growth from 0.6% to 1.9% during the years out to 2028.
MEDIUM & HEAVY VEHICLES. This segment is expected to grow in 2023 (+3.7%) but for the remaining years growth is a bit erratic as it ranges from -3.4% (in 2024) to +5.1%. The world’s largest producing country (China) remains strongly positive during the forecast period with growth ranging from 3.0% to 7.9%.
PASSENGER CARS/MINIVANS & SUVs. These segments were heavily affected by the pandemic, but despite this situation, growth in 2023 is expected to be +2.9%, and remains positive for most the rest of the forecast period with growth ranging from 1.5% to 4.7%.
POWER GENERATION. Power generation is expected to grow strongly during the forecast period with growth ranging from +2.3% to +5.1%.
RAILWAY. Global railway production is expected to grow strongly throughout the forecast period with an average growth rate of +6.0%.
RECREATIONAL PRODUCTS. This segment follows consumer products and includes items such as motorcycles, ATVs, scooters, personal watercraft, and snowmobiles. Now with higher inflation and rising costs 2023 market’s growth is slowing to +2.0% (+3.0% in Q2 2023). The key factors to better performance in recreational products are affordable personal transportation, significant demand for these products, the impact of electrification and higher consumer spending with more disposable income.
ALTERNATIVE POWER. After growth of +8.0% in 2022 (+7.6%), Battery Electric is expected to grow at between +6.7% in 2023 and then on between +10.2% and +11.9%. ICE applications on the other hand are growing much slower with +1.7% in 2023 and from then on growth rates are between +0.9% and +2.8%. Battery Electric is expected to grow from 13.5%% of the market in 2023 to 20.2% by 2028, while during the same period ICEs are expected to decline from 84.2% of the market to 75.8% in 2028. PSR
Jim Downey is Vice President-Global Data Products for Power Systems Research
