Global EconomyOutlook > Worldwide industrial production and overcoming of world economic crisis

Ten years of worldwide crisis overcoming from 2008 to 2017

Process of crisis overcoming since the last world economic crisis structurally changed

How does the status of the crisis overcoming look like ten years after the outbreak of the world economic crisis 2008/2009? Can the world economic crisis be considered as overcome? Will now follow a general upward business trend? These are reasonable questions to which only differentiated responses can be provided.

June 21st, 2018 - The following diagrams make it possible to identify the status of the crisis overcoming for each country at a glance because all indices of the industrial production show the value 100 for the beginning of the world economic crisis 2008.

 

The selected industrialized countries like the European Union, the USA, Japan; the BRIC countries Brazil, Russia, India, China; the MIST countries Mexico, Indonesia, South Korea and Turkey cover 82% (2017) of the machine exports from Germany.

 

So which status of crisis overcoming show these countries, being so important for the export, ten years after the outbreak of the world economic crisis of 2008/2009?

Industrialized countries: The USA, Germany and the European Union have overcome world economic crisis, Japan not yet

The chart below shows that industrial production in the USA exceeded 2013 with 101.2 index points the pre-crisis level. Germany succeeded with 101.2 index points one year later. Since then industrial production of both countries has been lying above pre-crisis level. So the year 2013 resp. 2014 marks the end of the world economic crisis for the US and Germany, four resp. five years after its outbreak.


Only nine years after crisis outbreak industrial production in the European Union as a whole outperformed the pre-crisis level (100.6) in 2017 thus terminating world economic crisis for the EU as a whole.


In Japan, however, industrial production persisted significantly below pre-crisis level with 91.9 index points. So Japan hasn't overcome yet world economic crisis even nine years after its outbreak.

The course of industrial production in the USA, Germany, the EU and Japan from 2008 to 2017.

So the features of this process of the crisis overcoming are summarized:

 

  1. Although the world economic crisis hit the industrialized countries in a uniform manner, each country’s process of crisis overcoming runs in a very non-uniform manner.

  2. Dynamic growth out of its crisis low in Germany, the European Union as a whole and in Japan last up to two years, then growth stops, and industrial production drops even again. Whereupon phases follow, in which weak growth and slight decreases of industrial production alternate.

  3. Only in the USA the process of the crisis overcoming indicates a continuous growth until 2014 followed by setbacks of industrial production in 2015 and 2016.

  4. Only nine years after the crisis outbreak the European Union as a whole outperforms slightly the pre-crisis level, while Japan still persists below of it.

Fifth structural change in the course of industrial production

From these features we derive a further, i.e. the fifth structural change in the course of industrial production of the industrialized countries. This structural change is:  

 

  • In place of a general upward business trend for the overcoming of an economic crisis a non-uniform process of crisis overcoming has emerged during which growth, stagnation and decreases of industrial production co-exist together producing a stagnant total tendency by mutual interaction with industrial production swinging up and down around this level for some time and in different countries.

 

The long duration of the world economic crisis as well as its depth are already considered and acknowledged by three structural changes.


The year 2017 is showing a unified growth of industrial production in the related industrial countries. So the year 2017 isolated considered, it might be possible to call the end of the non-uniform process of crisis overcoming. However, this statement seems to be too early. Japan lies still significantly below, the European Union with 100.6 index points only marginally over the pre-crisis level, while the US undercuts with 102.9 index points 2017 the level of 2014 (104.3).


So also for 2017 we see the non-uniform process of crisis overcoming as the fifth structural change in the course of the industrial production being in force.

Fifth structural change also affects the BRIC countries

The world economic crisis does not hit the BRIC countries in a uniform manner. In fact, in 2009 industrial production decreases in Brazil and Russia, stagnates in India while in China it further clearly grows although with slight weakened growth rate.

The industrial production in Brazil, Russia, India and China (BRIC countries) from 2008 to 2017.

But already one year after the crisis low in 2010, industrial production in the BRIC countries climbed over its pre-crisis level.


However, this dynamic growth out from its crisis low evaporates in Brazil, India and Russia in the following three years. Since 2014 industrial production in India grows again more strongly while it can grow only a bit in Russia. In Brazil industrial production stagnates from 2010 to 2013 after its dynamic growth and declines from 2014 to 2016. In 2017 it increases slightly to 87.4 index points, remaining well below its pre-crisis level.


China achieves already a duplication of its industrial production in 2015 compared to 2008. China is not part of the non-uniform process of crisis overcoming. It has been growing continuously. Only its weakened growth rates indicate a certain connection to the process of non-uniform cisis overcoming on its export markets.


So the BRIC countries having been unified growth-intensive before the world economic crisis 2008/2009 partly indicate also the close entwinement or coexistence of growth, stagnation and decrease of industrial production in the stage of the crisis overcoming.

MIST countries showing an eased structural change

Also the MIST countries (Mexico, Indonesia, South Korea and Turkey) are not hit by the world economic crisis in a uniform manner.


In 2009 industrial production declines in Turkey and Mexico, stagnates in South Korea and continues to grow in Indonesia.

The industrial production in Mexico, Indonesia, South Korea and Turkey (MIST countries) from 2008 to 2017.

But already one to two years later industrial production is again over its pre-crisis level. This dynamic growth out of the crisis low persists three years until 2012 in all MIST countries. Then the further development becomes different.


In Indonesia and Turkey industrial production is growing continuously and dynamically until 2017. In South Korea growth of industrial production migrates into stagnation since 2014. In Mexico industrial production slightly declines in 2013, grows again somewhat in 2014 and 2015 and drops again in 2016 and 2017.


So also the MIST countries are showing the fifth structural change after the world economic crisis, however, at an eased extent due to the clear growth of Indonesia and Turkey.

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