The peak impact of tariffs on global industrial output is still to come. We anticipate that industrial growth will slow from the second half of 2025.
The impact of tariffs and ongoing trade uncertainty on industry is only just starting to show up in the monthly data. The frontloading of the production in Q1 and early Q2, ahead of major tariff announcements, has started to unwind. The strong start to the year has led us to push up our global industrial value-added output forecast to 2.7% in 2025. However, we expect that industrial growth will slow considerably in the second half of the year and into early 2026. In 2026, we anticipate global industrial value-added output to grow just 1.9%, the slowest pace of growth since the global financial crisis in 2007–09.
- US: we continue to expect uncertainty and tariff-related issues will dominate the US industrial landscape over the coming quarters—along with trade, we forecast industrial output will shrink over the next three quarters through Q1 2026.
- China: Industrial production in China significantly exceeded our expectations in H1 2025. We have pushed up our industrial value-added growth in 2025 as a result, to 5.5%. We have also boosted our outlook for 2026 to 2.9%.
- Europe: We have not made material changes to our Eurozone industry forecast in the wake of the trade deal with the US.
- AI-related investment and the surrounding supply chains are a notable bright spot. Both global semiconductor sales and US construction spending on data centres are rising at a double-digit pace and have shown few signs of deceleration.
