Global output data undermine Trump rhetoric

North America’s share of global output has fallen much less than that of Europe or Latin America over the past 20 years, undermining US President Donald Trump’s claims that unfair trade deals have been detrimental to American workers in particular.

Since 1997, North America’s share of global output has fallen from 28.5 per cent of the total to a forecast 24.1 per cent this year, a decline of 15 per cent, according to data from Euromonitor, a research group.

But western Europe’s share has slumped 31 per cent over the same period, with its share set to fall below 20 per cent for the first time in 2017, compared with 29.1 per cent in 1997. Latin America has fared almost as badly, with its share slumping by more than a quarter to 5.1 per cent.

All are grappling with the growing power of Asian economies, which are on track to account for 40 per cent of global output this year, up from 26.3 per cent in 1997.

“The shift of the past 20 years has been the expansion of global supply chains which saw the integration of Asia, especially China, into the global manufacturing sector,” said William Jackson, senior emerging market economist at Capital Economics.

Mr Trump has claimed that “horrible” trade deals signed by his predecessors allowed American jobs to slip away to Mexico and China, and called the move to quit the 12-nation Trans-Pacific Partnership deal a “great thing for the American worker”. But the data suggest other European and Latin American nations have lost out much more.

Indre Cesniene, head of industrial research at Euromonitor, said: “In 2017 . . . Asia will account for 70 per cent of all high-tech goods produced globally, with virtually all major companies having production capacities in the region.”

Asia also accounts for more than half of global production of intermediate goods and machinery. Across manufacturing as a whole, Asia is forecast to have a 45.5 per cent share this year.

Separate figures from the UN suggest that, between 1990-2015, China went from the world’s 8th-largest manufacturer to its largest, South Korea from 12th to fifth, India from 14th to sixth, and Indonesia from 18th to 11th.

Asia remains far weaker in service sectors, however, accounting for less than a quarter of turnover in areas such as finance and insurance, and business services.

Euromonitor estimated that Asia’s share of global output will grow further, to almost 49 per cent of the total by 2025, with a 75 per cent share in sectors such as textiles and transportation equipment.

But Mr Jackson said this advance was “unlikely to continue at the same pace,” given rising protectionism and the fact that one-off boosts such as China joining the World Trade Organisation in 2001 cannot be repeated. “We’re already seeing signs that the integration of manufacturing supply chains has probably reached a peak,” he said.

Ms Cesniene said she did not envisage Mr Trump making much of a dent in Asia’s rise, arguing that manufacturers, such as automakers, want to be in the region as it is increasingly where their customers are based.

The figures are based on national accounts data and industry surveys, standardised by Euromonitor to strip out computational and methodological differences.