The highest industrial take-up growth in 2010 was recorded in the UK, followed by Russia, Czech Republic, Poland and Germany. Will the same markets emerge as winners over the next few years as accommodating ‘post-crisis’ economic policies come to an end?
Industrial production and exports – the key macroeconomic predictors of industrial performance, will grow at disparate rates across European markets. According to leading economic institutions, Czech Republic, Hungary, Slovakia, Turkey and Ukraine will record the highest growth rates in industrial production in 2011 (albeit lower than in 2010), with Germany being the only Western European country to see industrial production growth exceeding 7%.
The picture changes slightly when looking at export growth. Turkey and Hungary will be unable to match their growth in exports to their high growth rates of industrial production. On the contrary, Ireland, Finland, Romania and Russia will join the top spots in export growth rankings. Looking at industrial production and export growth together, it seems that the best performing markets, besides Germany, will be in CEE for 2011 with the Czech Republic, Slovakia and Ukraine dominating industrial activity. We do not expect any major changes over the 5-year period with only Germany dropping down the rankings as industrial production growth slows significantly from 2012 onwards. The UK is expected to perform relatively well compared with other WE markets such as Belgium, France and Italy.
Other factors such as transport infrastructure, logistics competence, ease of international shipments, efficiency of customs, ability to track/trace and timeliness – which are all aggregated into the Logistics Performance Indicator (published by the World Bank), will also play an important role. Current global rankings place Germany first with Sweden, Netherlands and the UK also placed highly. The highest ranking CEE country is the Czech Republic in 26th place, one place behind Spain, followed by Poland in 30th place. So even though growth in industrial production and exports will be the highest in the Czech Republic across European countries over the 5-year horizon, its relative position in LPI rankings might encourage occupiers to think twice before re-locating their activities away from core Western European markets. Overall, it seems that Czech Republic alongside Germany and the UK will remain the top industrial markets over 2011-2015.