According to a news article by the Guardian, German industrial production is suffering its most significant annual decline in nine years.

Author Muge Hizal Dogaroglu | Copperberg

Reading time: 1 min

As the German manufacturing industry has increasingly relied on exports to Asia for bolstering factory input, it is predicted that the recent tension between the US and China is partly responsible for the decline.

The ministry of economy said, “Industry remains in an economic downturn,” as production in construction fell 1.1% in the second quarter while energy output dropped 5.9% in the same period.

According to Ralph Solveen, a Commerzbank economist, the problems regarding last year’s switch to a new emissions measurement standard had an influence on car production as well. He added, “However, the main reason for this weakness is now likely to be significantly weaker foreign demand.”

Thomas Igou, Editorial Director of Copperberg, shared his thoughts on the reasons behind the recession:

“German industrial production is in a downturn, the worse one in nine years. There are short term impacts like the ongoing US-China trade war and devaluation of the Chinese Yuan as well as the uncertainty regarding the consequences of Brexit. Then, the long terms ones like the electrification of the automotive industry (which employs 870 000 people in Germany) in response to strict emission-control regulations in Europe.  All these market forces have lead to a decline in machine parts and car sales.”

We will follow closely how this recession will affect the rest of the manufacturing industry in Europe.