Germany’s Federal Statistical Office (Destatis) has announced provisional data on industrial production for July.
Accordingly, seasonal and calendar adjusted industrial production decreased by 0.8 percent in July compared to the previous month. The expectation for industrial production in the markets was 0.5 percent decrease. Thus, industrial production in the country carried its monthly consecutive decline for the third month.
June industrial production data, which was announced as a monthly decrease of 1.5 percent, was also revised as a decrease of 1.4 percent.
The data revealed that industrial production, excluding energy and construction, decreased by 1.8 percent in July compared to June.
In the said period, intermediate goods production decreased by 0.7 percent, capital goods production by 2.9 percent and consumer goods production by 1 percent.
On the other hand, an increase of 2.2 percent in energy production and 2.6 percent in construction was recorded.
According to the Destatis statement, production in energy-intensive industries decreased by 6 percent in July compared to June and by 11.4 percent compared to July 2022.
“Recovery is not yet on the horizon.”
In the statement made by the German Ministry of Economy and Energy, “While the production in the field of motor vehicles and spare parts, which is an important sector, decreased significantly with 9.4 percent, the production in the mechanical engineering sector, which is also important for the economy, decreased by 1.6 percent.” it was said.
For this reason, the weakness in industrial production continued at the beginning of the third quarter of the year. evaluation was made.
“Industrial production is now more than 7 percent below pre-pandemic level”
ING Germany’s Chief Economist Carsten Brzeski stated that industrial production in Germany fell for the third consecutive year in July, adding, “This provides further evidence that the risk of recession for the German economy has increased. “Although three years have passed since the onset of COVID-19, industrial production is now more than 7 percent below pre-pandemic levels.” used the phrases.
On the other hand, while the German economy shrank by 0.4 percent in the last quarter of last year and by 0.1 percent in the first quarter of the year, it failed to grow in the second quarter of the year.
While numerous crises such as the COVID-19 outbreak, supply chain disruptions and the Russia-Ukraine war in recent years have brought to the surface the weaknesses of the German economy, the fact that many countries, especially China, can produce more and more of the goods imported from Germany, and high inflation and increasing interest rates. It makes it even more difficult for the German economy to grow.
Slowing global growth, decline in exports, high energy prices, decline in industrial production, and consumers’ efforts to cope with rising inflation also negatively affect the German economy.
The Kiel Institute for the World Economy (IfW) expects the German economy to contract by 0.5 percent this year.