German industry plunged into “existential crisis”

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This “existential crisis” has left a dent in the German economy but could also have a contagion effect in other areas of the world. This is because the industry represents 24% of Germany’s Gross Domestic Product (GDP) and the country contributes 25% of the euro zone’s GDP.

“Existential crisis”. This Friday, El Economista defines the difficulties facing German industry. The reasons? The cost of energy, the effect of wars, weak investment, and global competition led by China, says the Spanish publication.

This “existential crisis” has left a dent in the German economy but could also have a contagion effect in other areas of the world. This is because the industry represents 24% of Germany’s Gross Domestic Product (GDP) and the country contributes 25% of the euro zone’s GDP, warns El Economista.

Added to this is the fact that 10% of European manufacturing companies are German, with the sector generating over 30% of the European Union’s gross value added. Not to mention, as El Economista explains, companies with German origins that are global leaders in their respective sectors, such as Bayer, BASF, Daimler, Volkswagen and Siemens.

This scenario could become more dire considering that industrial production in the country fell by 0.7% in November. Since the beginning of 2023, it has already dropped 5%, and is down 9.4% compared to the pre-pandemic period.

El Economista reinforces that this decline in German industry also includes construction, an indicator that fell 2.9% in November.

But the breaks in the industry are much broader. In the area of ​​production of durable consumer goods there was a decline of 2%, in November, the production of intermediate and capital goods fell by 0.7% and 0.5%, in that same month, the production of computers and products electronics fell 4.6%, and transportation equipment manufacturing fell 0.9%, and energy-intensive industries fell 1.8%.

And the short-term outlook is not the best. The cost of energy can delay the recovery of energy-intensive sectors. And even demand is following the same path given the country’s “weak economic growth”, which is negatively reflected in the quantity of national and international orders. Even sectors such as automobiles and construction, despite showing better performance during the pandemic, still have low demand, said “El Economista”.