Germany: Industrial Production Falls

Pessimistic forecasts about the economic situation in Germany are increasing. This time, the Federation of German Industry (Bundesverband der Deutschen Industrie, BDI) had its say, outlining a bleak economic picture for Germany for both 2024 and 2025. According to a recent BDI report, “this year, German industrial production will decline by 1.5% year-on-year, and exports will stagnate after contracting by 1.5% in 2023.” Nevertheless, the Federation of German Industries forecasts GDP growth of 0.3% in 2024, in line with preliminary estimates by Chancellor Olaf Scholz’s government.

These figures were presented by BDI Chairman Siegfried Russwurm at the opening of the annual Hannover Industrial Fair. He said: “German industry has yet to recover from the cost and demand shock, temporarily extremely high energy prices, and inflation.” On Wednesday, April 24, the German government is supposed to release official estimates of the German economy performance in 2024. According to some leaks, growth should come in at 0.3%, up 0.1 pp from February forecasts.

As Russwurm noted, increase in demand for German industrial products is expected due to the economic recovery in China and the USA. However, in his view, “the overall economic picture remains challenging.” Many German companies are moving production to the United States and some other countries. For manufacturers in Germany itself, “the problems remain serious” because “growth and profits are higher at their plants abroad.”