- German machinery production is forecast to fall by 8% in 2024, doubling the previous estimate of 4%.
- Weak demand from key markets such as the U.S. and China is driving the decline.
- The industry hopes for monetary policy easing in 2025, though global economic risks remain high.
Berlin, 10 September (FinanceFlashNews) – Germany’s machinery industry will experience a more substantial production decline than originally expected this year, according to the German Mechanical Engineering Industry Association (VDMA). VDMA now forecasts an 8% drop in production for 2024, compared to the earlier estimate of a 4% decline. This is the sharpest drop in the sector since 2020, when the industry was affected by pandemic restrictions, DPA reported.
According to VDMA chief economist Ralph Wiechers, the industry is facing weaker demand from key export markets, particularly the United States and China, while economic uncertainty in Europe, especially Germany, exacerbates the situation. However, he noted some optimism due to falling inflation and the potential for lower interest rates.
“Some central banks have already begun the cycle of rate cuts, and others are expected to follow. There is a legitimate chance that by the end of this year and into 2025, monetary policy will offer positive economic stimuli,” said Wiechers. Nonetheless, he warned that risks remain, particularly from the U.S.-China trade tensions and ongoing geopolitical conflicts in the Middle East and Ukraine.
The VDMA estimates that the decline in production could lead to the first drop in revenues since 2020. The association forecasts a turnover of €240 billion in 2024 and 2025, down from €256 billion in 2023.
Keywords: German machinery, production decline, VDMA forecast, weak demand, economic risks
