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German Industry Association Cuts Growth Forecast Amid Iran War
🇩🇪 Germany /Economy & Trade

German Industry Association Cuts Growth Forecast Amid Iran War

From Die Zeit · (3d ago) German Critical tone

Translated from German, summarized and contextualized by DistantNews.

TLDR

  • The Federation of German Industries (BDI) has lowered its growth forecast for industrial production this year due to the Iran war.
  • BDI President Peter Leibinger stated that stagnation, rather than growth, is now expected, marking a downgrade from the earlier projection of a 1% increase.
  • Leibinger cited a weak start to the year, ongoing geopolitical uncertainty from the Iran conflict, and structural issues within Germany as reasons for the revised outlook, warning of potential stagnation in the Eurozone.

The Federation of German Industries (BDI) has sounded the alarm, revising its industrial production forecast downwards for the current year. Citing the ongoing conflict in Iran as a major destabilizing factor, BDI President Peter Leibinger declared that the industry can now only hope for stagnation, abandoning the previous modest growth projection. This marks a significant downgrade, with Leibinger pointing to a weak start to the year and the lingering effects of geopolitical instability.

We are no longer competitive as a location.

— Peter LeibingerBDI President Peter Leibinger's assessment of Germany's industrial competitiveness.

Leibinger's assessment paints a grim picture for Germany's industrial sector, which has seen declining production for several years. The current capacity utilization is a mere 78 percent, highlighting the underperformance. The BDI chief emphasized that the Iran conflict has hit the global economy at a particularly vulnerable point, exacerbating existing challenges, especially concerning energy prices. He warned that even an immediate end to the conflict would leave a noticeable burden on the world economy.

Since 2022, industrial production in Germany has decreased every year.

— Peter LeibingerBDI President Peter Leibinger highlighting the declining trend in German industrial output.

Looking ahead, the BDI president cautioned that prolonged conflict could lead to unpredictable consequences, including further energy price hikes and a potential return to stagnation for the Eurozone. He suggested that a significant recovery might be pushed back to 2027. While government investments in infrastructure and defense may offer some support, Leibinger stressed they are insufficient for a substantial upturn.

For 2026, we no longer expect a recovery, but stagnation.

— Peter LeibingerBDI President Peter Leibinger's revised forecast for industrial production.

Crucially, Leibinger shifted the focus inward, arguing that geopolitical events are merely exacerbating pre-existing structural problems within Germany. He identified high operating costs, taxes, and excessive bureaucracy as key issues that have eroded the nation's competitiveness. The BDI is now calling on the German government to implement a reform package by summer to address these fundamental challenges and restore the industry's standing.

The crisis in Iran creates additional uncertainty and burdens companies.

— BDIThe Federation of German Industries explaining the impact of the Iran conflict on businesses.
DistantNews Editorial

Originally published by Die Zeit in German. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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