German industrial production fell much more than expected in March. This is mainly due to the weak performance of the country’s important automotive sector. Weakening output is fueling fears that Europe’s largest economy, and the Netherlands’ most important trading partner, is still in a recession.
Production fell 3.4% in March from the previous month, according to German statistics agency Destatis. There was still an increase of 2.1 percent in February. Economists polled by the Reuters news agency had expected a 1.3% decline. According to the statistics office, production in the first quarter was 2.5% higher than in the last quarter of 2022.
Drastic drop
“After a buoyant performance in industrial production at the start of the year, there was an unexpectedly sharp decline in March,” the German Ministry of Economic Affairs said. Production of motor vehicles and auto parts decreased by 6.5% from the previous month. Production of machinery and equipment decreased by 3.4% and production in the construction sector decreased by 4.6%.
Previously it appeared that German factory orders were down 10.7% in March. This was the largest monthly decline since the peak of the corona pandemic in 2020. “German industry is increasingly suffering from global interest rate hikes, which are increasingly slowing the economy,” said the chief Commerzbank economist Ralph Solveen. ‘The risks of a recession in Germany are increasing.’
recession
Retail sales and exports also fell sharply in March, raising the likelihood of a downward revision of gross domestic product (GDP) in the first quarter, ING chief economist Carsten Brzeski warned. “A downward revision would mean the economy goes into recession again,” Brzeski said.
At the end of April, Destatis announced that the growth of the German economy had stagnated in the first quarter, i.e. it showed neither growth nor contraction compared to the fourth quarter of last year. In the last three months of 2022, the German economy contracted by 0.5%. Germany narrowly avoided a recession. A recession is defined as two consecutive quarters of contraction.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
