Germany’s production and export volumes decline as the much-needed wear and tear that was pushed up earlier
After recent growth in the first quarter, German industrial production and exports fell in April, indicating that the previous rise was related to a pre-propaganda sprint.
Compared with April 2024, output in the manufacturing sector was 1.4% per month, down 1.8%.
In March, the total month grew 2.3%, down 0.7% year-on-year.
Meanwhile, exports from Germany were also disappointed in April, down 1.7% per month and down 2.1% this year.
Imports rose 3.9% from March to April, while jumping to 3.8% annually.
“Today’s industrial production data reflects a reversal of the foreload effect in the first quarter, which suggests that the structural weaknesses in the industry are not over yet,” Carsten Brzeski, head of global macros at ING, said in a note.
“However, at the same time, as industrial orders also improved, inventory levels began to decline, and the German industrial cycle gradually shifted.”
Despite some bright spots in the data, the U.S. government’s tariff threat is still weighing the prospects of Germany, which have been hampered by structural problems.
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In recent years, Germany has been known as the “European Patient” and its growth is limited by an aging labor force, excessive bureaucracy, high energy costs and slow productivity.
Still, GDP grew by 0.4% than expected in the first quarter of the year, driven by businesses seeking to raise Trump tariffs.
Economists hope that the ECB rate this week and increased defense spending will support Germany’s expansion forward.
Germany has approved a constitutional amendment to its “debt brake” rule, meaning that GDP with more than 1% of defense spending will not be subject to borrowing. The government has also created a €50 billion foreign fund for additional infrastructure spending.
“In two weeks, the government is expected to propose its budget plan in 2025 and 2026, which should include more details on how and when the government intends to spend €50 billion in the new infrastructure investment fund,” Brzeski said.
“While it is still early and no far-reaching structural reform has been proposed, the government’s policy action in the first month of office is promising and may spark positive momentum.”
