For 2018, the outlook is very optimistic: our largest producers expect a 7%-9% increase, as orders do not indicate a slowdown in sales. On the policy side, the General Assembly debated the European Commission's latest package on Artificial Intelligence, which set out a three-pronged approach: investments, preparations for socio-economic changes, and an ethical framework.
Economic situation and outlook
The high economic sentiment is gradually being transferred to consumption and industrial production. Demand for capital goods is at record-high levels and we have been seeing clear signs of sustained global manufacturing momentum at the beginning of 2018. Industrial strength is finally expanding beyond Germany, and our forecasts suggest a 3.9% gain in global industrial output in 2018 and 3.7% in 2019.
Global trade also boosted its growth in 2017 and is expected to increase further, but at a slower pace. For the same year, CECIMO-based machine tool builders exported about €20 billion worth of machine tools, showing a 9.1% increment compared to 2016. The main destinations outside CECIMO countries were China (15.4%), the US (10.6%), Poland (4.2%) and Mexico (3.4%). The increasing foreign orders point to a continuous improvement in machine tool exports in 2018. As a matter of fact, the demand for machine tools is expected to increase further in 2018, following the Business Confidence Indicator for Europe.
In 2017, CECIMO's machine tool consumption reached €16.5 billion (5% higher than in 2016) and is foreseen to increase by 8.2% in 2018 and 4.9% in 2019. Nevertheless, geopolitical risks remain at stake. The US is a great source of uncertainty in foreign policy and international trade, potentially having a significant impact on our businesses, but markets are yet to react. Brexit is also posing additional risks to exporters. China, the main driver of machine tool consumption, will benefit from the trade recovery and further increase machine tool consumption, although investments seem to be fading out. The US tax reform is expected to strengthen business outlook and benefit our companies. Therefore, the forecasts for global machine tool consumption have been revised to 6.1% in 2018 and 4.4% in 2019. Increases in machine tool demand and older machine tool purchases reaching the end of their service life are creating significant capacity constraints and make new investments more crucial.
Artificial Intelligence: how do we keep Europe at the top?
Artificial Intelligence (AI) has tremendous potential to unleash remarkable benefits for businesses. At the same time, the application of AI techniques and technology could result in a shift of workers between jobs and skills, and the displacement of workers with moderate proficiency in literacy and numeracy. That's why the CECIMO Spring Meetings in Mainz focused on AI and the future of work. Industrialists, EU officials, stakeholders and experts provided attendees with insights into the impact of AI on various sectors of the economy and employment.
Agoria is a member of CECIMO and CECIMO is the European Association representing the common interests of the Machine Tool Industries globally and at EU level. CECIMO brings together 15 National Associations of machine tool builders, which serve approximately 1500 industrial enterprises in Europe (EU + EFTA + Turkey), over 80% of which are SMEs. CECIMO covers 97% of total Machine Tool production in Europe and about 33% worldwide. It accounts for almost 150,000 employees and a turnover of €26 billion in 2017. Approximately half of CECIMO production is exported outside Europe. CECIMO assumes a key role in determining the strategic direction of the European machine tool industry and promotes the development of the sector in the fields of economy, technology and science.