Overall economic development

The IMF estimates that the global economy will grow by 3.4 % in 2020. The organization at the same time suggests that there are continued risks related to the uncertainty of political developments – especially the trade conflict between the US and China. Other factors include increasing protectionism, as well as trends moving away from multilateral trade relations based on fixed rules.

Newly industrialized and developing countries will once again record the strongest growth in 2020. The IMF forecasts a 4.6 % growth rate for this group of countries. The IMF attributes the decline in growth expectations compared to earlier forecasts to the structural decline in Chinese growth in connection with the negative impacts of the trade dispute with the US. Moreover, growth is weaker in Russia and India. The economic outlooks for larger Latin American economies such as Argentina, Brazil, and Chile have also recently dampened. The upward trend in Asian countries may be slightly below the prior-year level in 2020, with 6.0 %, according to the IMF. This trend includes China, which is important for the copper market.

The outlook for developed countries is more subdued overall, which can be seen in a reduced growth forecast of 1.7 %. At 2.1 %, economic growth in the US in 2020 is predicted to be lower than the previous year, due in part to the uncertain outcome of the trade conflicts and the weakening effect of corporate tax breaks from 2017. In the eurozone, the IMF sees 2020 economic growth at prior-year level, forecasting 1.4 %. The IMF estimates that the German economy will grow by 1.2 % in 2020, stronger than the previous year. The concrete impacts of Brexit continue to be a risk factor for economic development in the European Union.

Individual sectors such as the electrotechnical industry, the automotive industry, and the construction sector are important consumers of copper products. The economic developments expected here are as follows:

In its last forecast for the global electrical and electronic products market dated mid-2019, the German Electrical and Electronics Manufacturers’ Association predicts 3 % growth for the sector in 2020. This forecast was based on 53 countries, which together comprise approximately 96 % of the global market. Europe accounts for 17 % of the global market. Slight growth of 2 % is expected there for 2020. A somewhat lower growth rate of about 1 % is expected for Germany. 

According to the European Automobile Manufacturers’ Association, demand for automobiles in the EU decreased by 1.6 % in the first nine months of 2019, with about 11.8 million new car registrations. An initial recovery of the market was evident in fall 2019, as registration figures rose by roughly 15 %. The substantial increase is also related to the lower comparative figure from the same month of the previous year, as car manufacturing declined distinctly in fall 2018 due to the switch to the new WLTP (Worldwide Harmonized Light Vehicle Test Procedure) for cars. We anticipate recovery in the demand and sales situation for fiscal year 2019/20. We also expect positive growth momentum from the intensifying discussion regarding electric vehicles.

According to the main association of the German construction industry, the economic situation in the sector developed better than expected in 2019. The industry association expects an increase of 5 to 6 % for 2020. All construction categories and regions are supposed to contribute to the positive trend.

Based on these forecasts, we expect fairly stable economic development in 2020 in the three most important sectors for copper applications compared to the previous year. However, political and economic developments may decisively influence the respective market situations.

The effects of European and German energy and environmental policy are important for us but difficult to forecast in detail.