News from the German economy: Problems for Merkel as production shrinks – worrying new report | World | New


A worrying report from the Federal Economy Ministry found that industrial production fell 1% in April compared to March. The deficit was attributed to a lack of intermediate products, including electrical semiconductors and wood.

The crisis was also caused by a drop in the production of consumer goods by more than three percent and a fall in construction activity by more than four percent.

A subsequent survey by the German Chamber of Commerce and Industry (DIHK) suggested that around two-thirds of industrial companies are concerned about the economic impact of the shortage of raw materials.

Economists expected an overall increase in output of 0.5 percent in April after rising 2.2 percent the month before.

The Federal Economy Ministry said: “After the March increase, there was a slight slowdown in April, caused by a shortage of intermediates.”

Germany is still a long way from pre-pandemic levels, as production figures show production was 5.6% lower than in February 2020.

The ministry’s report found that industrial production, which serves the vast manufacturing industry, fell 0.7%.

The drop in production had a ripple effect across all product supply chains.

Economist Jens-Oliver Niklasch of the Mittelstand-Minded Universal Bank said: “Considering the high order book, this is a slight disappointment.”

Alexander Krüger, chief economist of the German private bank Bankhaus Lampe, added: “Once again, it is evident that the industry is still affected by the indirect pandemic pressure.

“Longer delivery times and physical bottlenecks are in fact signs of a booming economy, which does not exist at the moment.”

The slowdown in production by industrial companies has also resulted in higher prices as demand continues to increase.

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He said: “The picture of production expectations in different sectors is very nuanced.

“The auto industry and its suppliers are drastically lowering their expectations, but they continue to expect increased production.”

Mr Wohlrabe added that there were signs of an economic rebound in other sectors, with clothing manufacturers reporting plans to increase production for the first time in nine months.

In the first quarter of 2021, the German economy contracted by 1.8%.

The fall in GDP also represents a decline of 3.1 from the previous year.

(Additional report by Monika Pallenberg)


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