German machinery industry sees big production drop this year

BERLIN – A group representing Germany’s machinery industry said Tuesday it expects production to drop 17 per cent this year as the sector struggles with the fallout from the coronavirus pandemic and international trade tensions.

Orders for machinery, a major German export, were down 16 per cent in this year’s first seven months compared with a year earlier, while production declined 14 per cent, the VDMA association said. It cited the effects of the pandemic, protectionism in international trade, and change affecting the auto industry – a key customer.

Official data released Tuesday showed that Germany’s overall exports were up 4.7 per cent in July compared with the previous month.

That was the third consecutive month-on-month gain following huge declines at the height of Europe’s coronavirus lockdowns – but a much smaller increase than the 14.9 per cent seen in June. In year-on-year terms, exports were down 11 per cent.

That is in line with recent data showing that increases in German factory orders and industrial production also slowed in July.

The government said last week that the economy is performing better than expected following the easing of Germany’s lockdown restrictions, which were less drastic than in some other European countries.

It is now predicting that the economy will contract by 5.8 per cent this year, a somewhat more optimistic outlook than the 6.3 per cent it forecast in late April.

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