Released January 24, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Shaheen Chohan, Industrial Info's vice president for global analytics, invoked a nautical metaphor January 23 when assessing the outlook for global industrial project spending over the next three years. "There's fairer weather ahead, but still some choppy waters," he told an estimated 1,500 attendees at Industrial Info's 2020 Industrial Market Outlook in Houston. "There was slow, subdued growth in 2019, and we expect there will be a slight pickup in 2020, but we're still sailing with the anchor overboard."
In framing Industrial Info's three-year top-line global project spending forecast, Chohan started by listing the factors that made 2019 a mixed year. Global growth slowed, manufacturing in two dozen nations contracted, and trade barriers, protectionism and trade geopolitics held down economic growth.
He also cited data from the International Monetary Fund showing the world's largest economies, including the U.S., China and India, slowing in the second half of 2019. Overall, global gross domestic product (GDP) fell to about 3% for 2019, the IMF said in late 2019, down from a midyear projection of 3.7%. The agency expects the world's economies to grow 3.4% in 2020. Slower growth in the U.S. is expected to be offset by faster growth in India, Russia, Africa and Germany. The IMF expects China's economy to grow by 5.8% in 2020, down from 6.1% for 2019.
"The worst of the storms are behind us and we're looking for a modest rebound in 2020," Chohan told the Outlook attendees. Although global debt levels are rising, low interest rates are helping to offset some of the trade-war pain. The recent decision by the U.S. and China to take preliminary steps to lower trade barriers was a positive development. But there has been a decoupling of formerly synchronized growth patterns across nations and regions. And with interest rates at rock-bottom lows, central banks have little room to maneuver to counter unexpected jolts to national economies.
With all of that as background, Chohan provided a three-year assessment (2020-2022) of forecast capital spending by the world's largest economies, including:
U.S. and Canada: The U.S. is the world's largest national economy. U.S. and Canadian planned capital expenditures (capex) over the 2020-2022 period is estimated at $1 trillion, an increase of 3.8%, or about $37 billion, over the 2017-2019 period. Industries with the strongest projected growth in capex include Oil & Gas Production (driven largely by liquefied natural gas project spending), Industrial Manufacturing and Power.
China: The world's second-largest economy is projected to spend about $1.49 trillion on capital projects over the 2020-2022 period. That represents a decline of about 7.1%, or $114 billion, compared with the prior three-year period. The industries expected to see the largest increase in capital outlays include Power, Chemical Processing, Oil & Gas Pipelines and Industrial Manufacturing.
Europe: As a region, Europe is expected to see about $687 billion in capex over the next three years, Chohan estimated. That's a $12 billion, or 1.8%, increase in capex over 2017-2019. Industries with the strongest growth prospects include Oil & Gas Production, Oil & Gas Pipelines and Industrial Manufacturing. "Electric demand growth is flat across the continent, and the Power Industry capital that will be invested is mainly tied to changes in the fuel mix, from coal and nuclear to gas and renewables," Chohan told the Outlook attendees. "Oil & Gas exploration and production is a maturing sector, but there will be increased spending on in-plant subsea tiebacks and decommissioning," he added.
South America and Mexico: Chohan projected this region would see capital investments totaling about $611 billion over the 2020-2022 period, a $3.2 billion increase over spending in the 2017-2019 period. The Power, Oil & Gas Pipelines and Industrial Manufacturing industries are poised to increase capex by the largest amounts.
Western Asia/Middle East: Capex is expected to grow 5.1%, or $29 billion, to roughly $588 billion over the next three years. Chohan noted the region plans to make especially heavy investments to diversify their economies away from near-exclusive reliance on Oil & Gas production for national revenue. Power, Oil & Gas Production, Chemical Processing, Petroleum Refining and Oil & Gas Pipelines are the sectors where Industrial Info expects to see the highest capex investments.
Chohan concluded by reminding attendees that capex budgets from private industry, as well as national governments, are dynamic: "The days of 'set it and forget it' are long gone. Like the navigator in sailing, continuous attention and small adjustments are needed in order to sail in a straight path. With its always-on Global Marketing Intelligence platform and other tools, IIR can provide up to the minute assessments of project spending trends by industry, nation and region anywhere in the world."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
In framing Industrial Info's three-year top-line global project spending forecast, Chohan started by listing the factors that made 2019 a mixed year. Global growth slowed, manufacturing in two dozen nations contracted, and trade barriers, protectionism and trade geopolitics held down economic growth.
He also cited data from the International Monetary Fund showing the world's largest economies, including the U.S., China and India, slowing in the second half of 2019. Overall, global gross domestic product (GDP) fell to about 3% for 2019, the IMF said in late 2019, down from a midyear projection of 3.7%. The agency expects the world's economies to grow 3.4% in 2020. Slower growth in the U.S. is expected to be offset by faster growth in India, Russia, Africa and Germany. The IMF expects China's economy to grow by 5.8% in 2020, down from 6.1% for 2019.
"The worst of the storms are behind us and we're looking for a modest rebound in 2020," Chohan told the Outlook attendees. Although global debt levels are rising, low interest rates are helping to offset some of the trade-war pain. The recent decision by the U.S. and China to take preliminary steps to lower trade barriers was a positive development. But there has been a decoupling of formerly synchronized growth patterns across nations and regions. And with interest rates at rock-bottom lows, central banks have little room to maneuver to counter unexpected jolts to national economies.
With all of that as background, Chohan provided a three-year assessment (2020-2022) of forecast capital spending by the world's largest economies, including:
U.S. and Canada: The U.S. is the world's largest national economy. U.S. and Canadian planned capital expenditures (capex) over the 2020-2022 period is estimated at $1 trillion, an increase of 3.8%, or about $37 billion, over the 2017-2019 period. Industries with the strongest projected growth in capex include Oil & Gas Production (driven largely by liquefied natural gas project spending), Industrial Manufacturing and Power.
China: The world's second-largest economy is projected to spend about $1.49 trillion on capital projects over the 2020-2022 period. That represents a decline of about 7.1%, or $114 billion, compared with the prior three-year period. The industries expected to see the largest increase in capital outlays include Power, Chemical Processing, Oil & Gas Pipelines and Industrial Manufacturing.
Europe: As a region, Europe is expected to see about $687 billion in capex over the next three years, Chohan estimated. That's a $12 billion, or 1.8%, increase in capex over 2017-2019. Industries with the strongest growth prospects include Oil & Gas Production, Oil & Gas Pipelines and Industrial Manufacturing. "Electric demand growth is flat across the continent, and the Power Industry capital that will be invested is mainly tied to changes in the fuel mix, from coal and nuclear to gas and renewables," Chohan told the Outlook attendees. "Oil & Gas exploration and production is a maturing sector, but there will be increased spending on in-plant subsea tiebacks and decommissioning," he added.
South America and Mexico: Chohan projected this region would see capital investments totaling about $611 billion over the 2020-2022 period, a $3.2 billion increase over spending in the 2017-2019 period. The Power, Oil & Gas Pipelines and Industrial Manufacturing industries are poised to increase capex by the largest amounts.
Western Asia/Middle East: Capex is expected to grow 5.1%, or $29 billion, to roughly $588 billion over the next three years. Chohan noted the region plans to make especially heavy investments to diversify their economies away from near-exclusive reliance on Oil & Gas production for national revenue. Power, Oil & Gas Production, Chemical Processing, Petroleum Refining and Oil & Gas Pipelines are the sectors where Industrial Info expects to see the highest capex investments.
Chohan concluded by reminding attendees that capex budgets from private industry, as well as national governments, are dynamic: "The days of 'set it and forget it' are long gone. Like the navigator in sailing, continuous attention and small adjustments are needed in order to sail in a straight path. With its always-on Global Marketing Intelligence platform and other tools, IIR can provide up to the minute assessments of project spending trends by industry, nation and region anywhere in the world."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
