Factors contributing to the global manufacturing slowdown

China, the US, and Europe are all experiencing a slowing in manufacturing production. We asked our Zintro experts what is contributing to the slowdown and what’s ahead.

Nazmul Hasan Serneab, a garment manufacturer and exporter, says that the main reason behind the slowdown is because people have lost their purchasing power, and as a result, demand for various commodities has declined. “Manufacturers had to slow down production of products because of this reduction in demand,” he says. “We need global leaders to take short-term and long-term measures to address this issue.” Meanwhile, the trend will continue.

Franco Oboni, PhD, an expert in risk and crisis management, says that a paper he published in November 2008 called Economic Downturn Magnitude and Duration Quantitative Study, provided quantitative predictions for the probability of the economic downturn duration, and expressed a scale of socio-economical damages at country level. “The prediction was that there would be a 10 percent chance the crisis would last three to six years (2011-2014) and another 10 percent chance it would last more than six years (past 2014). Those durations were paired with a 25 percent chance of a significant worsening of the socio-economical situation,” he explains. “This included a 55 percent chance of a critical evolution of disservice in industrialized countries.”

Oboni says that the report included potential rates of unemployment (up to 10 percent -12 percent), poor to non-existent maintenance of civil systems, reduced health programs, reduction of salaries of public officers, protests, and criminality increase, evolving into severe reductions of public transportation, gradual replacement of police forces with armed forces, and reduction of state-managed retirement plans. All of these issues can contribute to instability, which can in turn slow production across industries and across countries.

“From what we now read in the media, several industrialized countries are following the path we described, so we are not at all surprised that the recessions continues to linger and that global production is slowing,” Oboni says. “What we are seeing is the long tail of what has happened, and we are in for several more years of the same, as we predicted.”

By Maureen Aylward

What do you think?

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