Germany is facing significant economic challenges, evidenced by a decrease in industrial output and unstable demand in recent months.
Decline in Production and Orders
According to the Federal Statistical Office, Germany’s industrial production fell by 1.9% in June compared to the previous month, marking the lowest level since May 2020 during the COVID-19 pandemic. Analysts had expected a smaller drop of just 0.5%. Industrial orders also decreased by 1% for the second consecutive month, largely attributed to weakening external demand.
Germany’s Export Dynamics
Despite issues in domestic production, Germany’s exports rose by 0.8% in June, reaching €130.5 billion. The main increase was seen in shipments to other EU countries, which grew by 2.4%. However, exports to the United States fell by 2.1% and have now declined for three consecutive months.
Outlook for the German Economy
The current situation has far-reaching consequences for the German economy. Carsten Brzeski from ING Research noted that the latest figures may lead to a downward revision of the estimated 0.1% contraction of GDP in Q2 2025. Long-term forecasts remain bleak, especially with slowing growth in both Europe and China.
In summary, Germany faces a complex set of economic challenges that may hinder recovery from the pandemic and threaten its export-oriented model.
