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World industrial production fell 4.2% in 2020

Global industrial production fell 4.2% year-on-year in 2020, reported the Netherlands Bureau for Economic Policy Analysis (CPB).

After growing 3.1% in world industrial production in 2018, the following year it advanced only 0.9 percent.

At the beginning of this last triennium, world industrial production remained weak, but then the situation worsened due to the Covid-19 pandemic, which caused supply and demand shocks in the world economy.

Supply was interrupted due to production shutdowns and shutdowns, logistics disruptions and labor shortages.

On the other hand, demand fell due to lower consumption and lower imports.

World industrial production

These shocks had adverse effects on production, trade and FDI, and on global value chains.

With this, UNCTAD projects a decrease in global FDI flows of between 5 and 15% in 2020

On a month-on-month basis, world industrial production increased 1.3% (having increased 1.2% in November, with an initial estimate of 1.1%) and growth was 3.5% in the fourth quarter of 2020.

Global industrial production boost was 3.5% (not annualized; 4.2% in November, unchanged from initial estimate).

Context

According to UNCTAD, we live in an era of dramatic technological advances, concentrated mainly in developed countries, but the great divisions between countries that are seen today began with the beginning of the first industrial revolution.

At the time, most people were equally poor, and the gaps in per capita income between countries were much smaller.

Then, with waves of technological change, Western Europe and its offshoots (Australia, Canada, New Zealand and the United States), along with Japan, moved forward.

Most of the other countries remained on the periphery.

Each wave of progress was associated with sharper inequality between countries, with increasing disparities in access to products, social services, and public goods, from education to health, from ICT infrastructure to electrification.

However, some countries, particularly in East Asia, were subsequently able to catch up through technological learning, imitation and innovation.

 

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