German industrial production to fall again

BERLIN: German industrial production is set to fall again this year and exports will stagnate, lobby group BDI forecast, flanked by other industry groups that also painted an uncertain outlook for Europe’s biggest economy.

“Industry in Germany has not yet recovered from the cost and demand shocks, from moments of extremely high energy prices and from inflation,” BDI President Siegfried Russwurm said at Hannover Messe, one of the world’s biggest trade fairs.

The industry association forecast a 1.5 per cent fall in production in 2024, the same decline as last year, while exports were expected to be flat following a drop of around 1.5 per cent in 2023.

The BDI expects the German economy to grow by just 0.3 per cent this year, compared with forecast global growth of 3 per cent. That would mean Germany again lagging other major industrialised countries.

The German government will on Wednesday nudge up its growth forecast for this year to 0.3 per cent, from 0.2 per cent previously, a source told Reuters.

“The challenges for industry remain great,” said Russwurm. “German companies are currently achieving stronger growth and profits primarily at their production sites abroad.” “Despite moderate recovery prospects, we must not delude ourselves: Overall, production figures have been showing a worrying downward trend for years,” Russwurm said.

The VDMA Engineering Association said a slump in foreign orders had bottomed out, but production in its sector was still expected to drop this year, confirming its previous forecast of a 4 per cent decline.