While inflation is decreasing, past interest rate rises continue to affect households and businesses. Against this backdrop, we looked for ‘bright spots’ in sector performance.
We analysed the major industries across Europe, the Americas and Asia-Pacific to see where the opportunities are for the current year, and into 2025.
Europe
The industry short-term outlook remains subdued. Energy-intensive sectors are not yet in recovery, and the ongoing weakness of the German economy drags down eurozone growth. However, there are signs of sectors´ weaknesses bottoming out, with a modest recovery expected in H2 of 2024. Against this backdrop, some bright spots exist in the ICT and pharmaceutical industries:
ICT sector - Europe
- We expect high-tech goods output growth in Europe to slow down to 0.3% this year, after growing 4.4% in 2023.
- ICT consumption and investment still face headwinds from high interest rates and lower investments. Chip demand from automotive has slowed down markedly.
- Despite the dent, some European ICT markets like Ireland, Italy, the Netherlands, Poland and Spain are expected to show solid growth rates this year.
- Across all markets a gradual rebound is set to start in H2 of 2024, and European ICT output is forecast to increase by about 3% in 2025. Demand will be driven by investment in AI and digital technology.
Pharmaceuticals sector - Europe
- European pharmaceutical production is set to pick up after a modest 2% growth last year, forecast to increase 5% this year and 3.2% in 2025.
- A growth driver in the short- and mid-term are blockbuster weight-loss drugs, with major investment in production facilities to come.
- Higher real incomes will spur demand for over-the-counter drugs.
- The nature of pharmaceuticals as essential goods, combined with Europe´s well-established manufacturing facilities, supply chains and production standards promise solid growth in the medium term.
The Americas
Latin America´s economic growth is forecast to be modest at 0.8% this year. In contrast, the US economy has proved to be resilient despite monetary tightening, expected to grow 2.4% in 2024. A strong labour market sustains consumer spending, but US industrial activity will decelerate in 2024, due to the lagged impacts of interest rate hikes and still tight lending conditions. That said, the outlook for chemicals and transport is not at all bad, and even bright for ICT:
Chemicals sector - The Americas
- Chemicals output in the Americas is forecast to rebound 1.7% in 2024 and 2.1% in 2025, after a 2% contraction last year.
- US chemicals production is set to accelerate in H2 of 2024, supported by ongoing consumer spending and expected monetary easing.
- Shale gas provides the US chemical industry with a feedstock cost advantage relative to producers elsewhere.
- US state support for domestically produced semiconductors, lithium batteries, solar panels and other clean technologies will spur demand for required chemicals.
- Chemicals output in Canada is forecast to rebound by about 3% annually in 2024 and 2025 after a contraction last year. A more positive outlook for manufacturing drives demand for basic chemicals.
ICT sector - The Americas
- High-tech goods output in the Americas is expected to increase 4.3% in 2024 and 3.3% next year.
- We forecast production in the US to increase 4.7% in 2024 and 3.4% in 2025. The electronics components and boards segment will grow by about 10% this year. With the Chips Act more than USD 200 billion of investment in new semiconductor making facilities has been announced.
- US telecommunication equipment is expected to grow by 7% this year, due to ongoing upgrades of broadband infrastructure and of 5G mobile systems.
- Mexico´s ICT market is expected to expand by 6.1% in 2024 and 3.4% in 2025, driven by increased demand for AI, digital technology, cybersecurity and healthcare IT.
Transport and logistics sector - The Americas
- US transport and logistics output is set to grow by about 3% in 2024. Goods and services transport growth is supported by ongoing robust consumer sentiment and spending.
- US government support and investment in infrastructure will help to improve supply chain efficiency, reduce costs and stimulate demand for transportation and logistics services.
- In Canada and Mexico transport and logistics is expected to grow 4.3% and 3.3% respectively this year. In both countries the sector benefits from US economic prospects.
Asia-Pacific
While GDP growth in the Asia-Pacific is set to slow down to 3.7% in 2024, it remains higher than global growth (forecast 2.4%). Across most markets, the growth expectations of major sectors are favourable. Chemicals, ICT, food and transport stand out.
Chemicals sector - Asia-Pacific
- Chemicals output in the Asia-Pacific is forecast to increase 5.2% in 2024, compared to 3% worldwide.
- We expect the region to be the best chemicals sector performer in the coming years. In many markets a rising middle class drives demand for segments like soaps & detergents and speciality chemicals.
- 2024 chemicals output increase will be highest in China (+6.2%), Thailand (+5.8%), Indonesia (+4.8%) and India (+4.2%). Growth in all major regional markets is forecast to remain robust in 2025.
ICT sector - Asia-Pacific
- High-tech goods output in the region is expected to increase by 6.7% in 2024 compared to 3.3% worldwide. Growth is expected to accelerate to 7.7% in 2025.
- Chinese ICT production is forecast to increase 6.2% in 2024 and 7.9% in 2025, due to government support for related corporate investment and innovation. US export restrictions appear to accelerate China´s chipmaking activities.
- ICT output in South Korea and Taiwan is forecast to increase 12.7% and 8.6% respectively. Semiconductor producers benefit from the ongoing AI boom. In both countries there are significant investment plans for manufacturing expansion.
- High-tech goods growth of more than 5% this year in Indonesia, the Philippines and Vietnam is spurred by supportive government policies and private investment.
Food sector - Asia-Pacific
- Food and beverages output in the Asia-Pacific region is forecast to increase 3.4% in 2024 and 4.7% in 2025.
- With 7%, China will record the highest food growth rate in the region. Compared to previous generations, the population is more willing to spend than to save on food. It is also less price-sensitive.
- Across emerging markets in the region, a rising middle class continues to substitute low value-added staples with higher value-added food goods.
Transportation and logistics sector - Asia-Pacific
- Transport and logistics output in the Asia-Pacific region is forecast to increase 6.3% in 2024, compared to 4.0% worldwide.
- With the exception of Australia and Singapore, all regional main markets show robust increases of more than 5%.
- Transportation and logistics in India is expected to increase 8.9% in 2024 and 7.5% in 2025, benefiting from ongoing improvements in infrastructure and transport networks.
- Sector growth in China should amount to more than 6% annually in 2024 and 2025, driven by the goods freight segment and government support for businesses and infrastructure investment.
- Japan´s transport sector is set to grow 6.2% this year, significantly above the long-run average. Increasing automation results in higher demand for transportation and logistics services.
To find out what’s in store for your sector, download our full analysis:
