Interact Analysis forecasts 2.9% manufacturing growth in 2026, with Asia expected to post the fastest regional gains.
Manufacturing output projected to grow 2.9% in 2026
- New analysis forecasts improvement in 2026, though uncertainty remains
- Output is projected to grow 2.9% in 2026, with 3.1% average annual growth forecast for 2025-30
- Asia is expected to record the fastest regional growth, with India forecast at 5% in 2026
Interact Analysis says the manufacturing industry faces an uncertain 2026. According to the market intelligence firm, the year’s performance will depend on global events and tariffs. Its latest manufacturing output forecast says that while the Americas and Asia grew in 2025, inventories are expected to normalize 2026 and investment conditions may improve, with modest recoveries expected in regions recovering from downturns.
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Interact Analysis forecasts 2.9% growth in 2026, up from 2.0% in 2025. Over the longer term, it projects average annual growth rate of 3.1% from 2025 to 2030, with total production reaching $48.1 trillion in 2030.
Better outlook for 2026 driven by technology, trade and investment
The manufacturing output forecast for 2026 is slightly better than earlier predictions, with trade, technology and investment contributing to the improvement. However, the sector still faces challenges from geopolitical tensions, conflicts, tariffs and protectionist policies.
Industrial demand remains relatively stable as manufacturers adjust to tariffs, which is accelerating cost pressures and changing investment timing. Technology adoption is also helping offset weakness in other parts of t industry. AI-related sectors such as automation, HVAC, semiconductor equipment and data centers are showing growth, though concerns remain about long-term profitability, broader adoption, returns at scale and the risk of overcapacity.
On trade tariffs, more details are now available about likely tariff levels and their short-term effects, although additional retaliatory measures remain possible. A strong US economy could make the economic cost of tariffs seem less severe, increasing the likelihood that other countries will introduce tariffs.
Asia leads the way in outlook, average annual growth and output
Interact Analysis forecasts long-term growth across all regions through 2030, with smaller markets having greater growth potential. Asia is projected to post the highest growth, with 3.2% growth in 2026 to $30.1 trillion and an average annual growth rate of 3.3% from 2025 to 2030. India and South Korea are forecast to post relatively strong 2026 growth rates of 5% and 3.5%, respectively. In the Americas, projected growth for 2026 is 2.2%, down from 2025, with total production reaching $9.6 trillion and an average annual growth rate of 3.0 %. Europe is forecast to grow 2.5% in 2026, with total production of $8.4 trillion, after several weaker years. Its average annual growth rate for 2026 to 2030 is projected at 2.2%.
Jack Loughney, Interact Analysis senior data analyst, UK, says, “The primary sentiment going into 2026 could best be described as apprehension. Escalating geopolitical strife, punitive and retaliatory tariffs, and companies placing large bets on a golden goose whose profitability long-term is currently in question all lends itself to a year which could swing positively or negatively on a whim. Our current position is to expect modest growth but be prepared for this positivity to erode relatively quickly if global events start taking a turn for the worse.
“One underlying cause of this weakness is the uncertainty which accompanies the protectionist actions many regions are taking. The US did manage to grow in 2025 even in the face of tariffs, however, whether they were simply burning through buffer and will enter a much slower period this year should become quickly apparent as the year continues.”
Edited by Puja Mitra, WTWH Media, for Control Engineering, from an Interact Analysis news release.
