Trends in Germany's manufacturing industry and foreign trade after the pandemic

Sona Benecka

A chapter in CNB Global Economic Outlook - October 2024, 2024, pp 14-19 from Czech National Bank, Research and Statistics Department

Abstract: Germany is going through a challenging period - the impacts of the energy crisis and structural challenges, as well as cyclical weakness are giving rise to concerns about the "sick man of Europe". 2 After an optimistic start to 2024, when energy-intensive industries also saw a recovery, hopes for a robust recovery faded again. The German economy's unsatisfactory performance is a result of households' still-low willingness to spend and appreciable fiscal restrictions, as well as German industry, in particular, which is lagging behind. This is because the recovery of the "German engine" is crucial for the economy as a whole. In the following text, we will therefore focus on the main trends in Germany's manufacturing industry and foreign trade. We will analyse in detail the territorial and commodity structure and relations with domestic and European industrial production. It turns out that German industry is strongly intertwined with European production, with no significant specialisation in terms of either sectors or trading partners. It was able to cope with the end of gas supplies from Russia and geopolitical changes, but increasing Chinese competition, persisting high prices for energy, especially gas, and a lag in information technology will require a fundamental revision of Germany's growth model. However, Europe as a whole is facing major challenges, as shown by the long-awaited analysis by Mario Draghi on the direction of European competitiveness.

Date: 2024
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