Even as experts are signaling caution in their outlook for the automotive sector, the International Monetary Fund (IMF) is lowering its forecast of economic growth for this year.
In its April 2016 report, the IMF reduced its January 2016 projection of global economic growth from 3.4% to 3.2%, citing a variety of risk factors that the IMF sees as becoming more likely, such as:
- potential financial instability in emerging markets and in China in particular,
- the effect of low oil prices on oil exporting nations,
- a reduction in consumer demand flowing from the poor performance in equity markets in late 2015 and early 2016,
- geopolitical conflict and terrorism,
- and Britain’s looming vote on a potential exit from the EU.
The report also mentions factors that have particular impacts on the manufacturing sector, as China’s growth is now buoyed more by gains in the service sector than in manufacturing, and a strong U.S. dollar puts pressure on U.S. manufacturing. Depressed commodity prices have also led to weaker investment in countries that depend on commodity extraction and exports, and in turn a “weakness in global manufacturing activity and trade.”
While not a cause for panic, the report indicates that there may be some headwinds for further growth in the automotive industry, particularly as markets that have become important drivers of growth for the industry, such as China, are facing a potential leveling-off. As manufacturers prepare for the coming months and years, they should carefully monitor the risk factors identified in the IMF report to determine how those factors will impact consumer demand.
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney.
This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary.
The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites.
In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.