Clouds are gathering on the horizon of Germany's economic recovery

Germany recorded a 10.7% drop in car orders in March, the most since the pandemic (illustration image). © AP - Jens Meyer

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1 min

After a decline in gross domestic product at the end of 2022 and stagnation in the first quarter, the government expects growth to accelerate in the coming months. But some indices are not good, as shown by the severe decline in industrial production in March, announced on Monday.

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With our correspondent in Berlin, Pascal Thibaut

Analysts have the blues. Several of them, interviewed on Monday, May 8, believe that the improvement in the economy in Germany in the second half of the year could deflate like a balloon. If recently the International Monetary Fund (IMF) forecast a very slight recession for 2023, the German government has revised its forecasts upwards.

The significant drop in industrial production in March of -3.4%, according to figures published Monday by the Federal Statistical Office, higher than expected, throws a chill. After the recovery at the beginning of the year, the relapse is not encouraging. The automotive sector was severely affected with a decline of 6.5% but also construction (4.6%) where rising rates and rising prices play a negative role. Energy-intensive industries are still suffering from price increases even though they have slowed, their activity has decreased by 3.3%.

Bad news

Industrial production had picked up again at the beginning of the year, allowing Germany to avoid recession by a hair, after shortages of supply of industrial components and inflation that affected the German economy.

But this poor index published this morning comes after two other bad results a few days ago for industrial orders, which fell heavily in March, by 10.7%, and exports.

The German government is counting on growth of 0.4% over the whole of 2023.

► Read also: Volkswagen invests 122 billion euros in the car of the future

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  • Germany
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