World industrial production fell 0.3% in February

Global industrial production fell 0.3% in February compared to January, reported the Netherlands Bureau for Economic Policy Analysis (CPB).

Behind this slight contraction is a drop of -1.5% in developed economies.

Meanwhile, in emerging economies, industrial production increased 0.8 percent.

All of this against the background that the risks to the baseline projections for global GDP growth lean to the upside, as the additional fiscal stimulus planned by US President Joe Biden represents a key upside risk.

The simulations of the model suggest that it will raise the level of real GDP in the United States by 2-3% and push the economy above its potential, although the impact on inflation is likely to be moderate, according to Bank Central European estimates.

Europe and industrial production

The EU-UK trade agreement and the greater recovery projected in advanced economies explain the upward revisions in external demand from the euro area.

The European Central Bank projects that this indicator will increase 8.3% this year and 4.4 and 3.2% in 2022 and 2023 respectively.

Following the strong recovery in growth in the third quarter of 2020, real GDP in the euro area declined 0.7% in the fourth quarter.

If the full year is considered, it is estimated that real GDP contracted 6.6% in 2020, and the level of economic activity for the fourth quarter of the year was 4.9% below its pre-pandemic level at the end of 2019.

Incoming economic data, surveys and high-frequency indicators point to continued economic weakness in the first quarter of 2021 driven by the persistence of the pandemic and associated containment measures.

In December 2020, world industrial production grew 1.4%, while in January 2021 this indicator increased 1.8%, at month-on-month rates.

In a disaggregated form, in February 2021 compared to the immediately previous month, industrial production fell 1.3% in the Euro Zone; it fell 2.6% in the United States and contracted 2.7% in Japan.

At the same time, industrial production climbed 1.6% in China and increased 0.5% in Latin America.