With currency effects expected to impact the market to a lesser extent this year than last, China and India are forecast to lead overall instrument demand growth for 2016, increasing 6.2% and 4.8%, respectively. China’s economy is currently adjusting toward a more open and market-based economy, yet it will lead growth for the instruments industry fueled by robust demand in life science applications. India is projected to experience a solid year of growth, benefiting from lower commodity prices and strong investment in the country. The US and Canada experienced an exceptional 2015. This momentum will likely continue for 2016 due to strong demand from biotechnology and clinical markets. However, 2016 is an election year in the US, which may cause some uncertainty that may delay or suppress growth in some markets. Europe and Japan are expected to rebound from last year’s decline with growth. Latin America and Rest of World will struggle somewhat in 2016.

In 2015, global economical growth rates slowed to approximately 2.4% and this year, they will begin to rise in most regions, albeit at a sluggish pace. Projections forecast by the International Monetary Fund (IMF), Organization of Economic Co-operation and Development (OECD) and the World Bank (see tables) all indicate a modest projected upturn in global GDP in 2016. Though weak growth within emerging markets will weigh down global economic expansion in 2016, the World Bank estimates that economic activity will likely increase moderately, forecasting a global growth of 2.9% .

In its November 2015 “Economic Outlook,” the OECD reconfirmed the slow growth rates of global GDP. The IMF “World Economic Outlook” forecast, released in October 2015, suggested similar trends” (see table). Duke University and CFO surveyed over 1,000 CFOs for the December 2015 “Global Business Outlook,” including 500 executives from North America, 118 from Asia, 101 from Europe, 250 from Latin America and 61 from Africa. The weighted average results of the forecast for R&D and capital spending are divided into regions below.

Duke/CFO Survey Results

US firms expect their R&D spending to increase 3.3% in 2016, with capital spending rising 2.6%.

CFOs in China predict that in 2016, R&D expenditure will grow 2.7%. Growth for capital spending has generally been paused, but Chinese CFOs expect growth of 1.8%.

As economic growth is solidifying in Europe, European CFOs expect R&D spending to increase 5.4% for their companies, with capital spending increasing 3.7%.

Asia still has a strong growth rate, though it is projected to be less than what it has experience in recent years. Excluding China and Japan, Asian CFOs predict R&D spending to rise 4.3%. Capital spending is expected to jump 12.7%, with a 5% median growth rate.

R&D expenditures by Japanese companies are expected to rise 5.5% and capital spending will increase 6.7%.

Executives in Latin America (excluding Brazil) expect capital spending to rise 2.4% and R&D spending to rise 2.6% in 2016.

Brazil is facing an economic crisis in 2016, with the country in a recession. Due to factors such as economic uncertainties, currency risks, weak demand, government policies, issues with access to capital and corporate tax codes, R&D spending in Brazil is expected to fall 2.8%. Capital spending is forecast to fall 5.5%, for a median growth rate of 0%.