The factory orders in Germany they fell by 5.8% in August, marking a worse figure than analysts expected. This is yet another sign of recession for the German economy and the Berlin government is increasingly pessimistic. In the next few days, Economy Minister Robert Habeck is expected to announce a downward revision of GDP estimates.
The German crisis derives from a series of circumstances that have undermined the foundations of the country’s success in recent decades. From the end of gas supplies from Russia to the collapse of exports to China, passing through the ecological transition of the automotive sector that the large companies based in Germany do not seem capable of completing.
Factory orders collapse: Germany prepares for recession
The German Federal State Statistics Office, Destatisannounced that August factory orders recorded a drop of 5.8% in the country. An unexpected collapse even for the most pessimistic of observers, who expected a drop of 2% at most after another downward leap in July had recorded a -3.9% drop for this figure.
This is yet another confirmation of the difficulties of the German economy. The newspaper Sueddeutsche Zeitung anticipated the communications of the Minister of Economy Robert Habeckwhich is expected to announce a revision of the country’s GDP data on Wednesday 9 October. 2024 will be a year of recession, -0.2%, for Germany’s gross domestic product, which however should recover in 2025, rising to +1.1%.
“The German economy can grow significantly and stronger in the next two years if the measures are fully implemented,” Habeck said, speaking of the plan envisaged by Olaf Scholz’s government to revive growth in the next two years, but the German crisis It has very deep roots.
From Volkswagen to China: why Germany is no longer growing
Over the last two years, the German growth model has been undermined to its foundations. For decades, cheap gas from Russia and massive exports to China had fueled Germany’s economy, so much so that it pushed the government to take initiatives to increasingly accentuate these ties, such as the closure of nuclear power plants.
Politics Zero Covid of China and the war in Ukraine undermined both these premises and Germany found itself having to face an increase in costs and a decrease in sales of its companies. In the meantime, one of the most important sectors in the country, the automotive sector, has been forced by European regulations to force a transition to electric cars which is not finding particular outlets on the market. Volkswagen in particular has gone into crisis and is now thinking of closing some factories in Germany.
The effects of this crisis also have important consequences for Italy. There Germany in fact, it represents both a fundamental outlet market for our companies and a point of reference for the imports of certain products. An excessive slowdown in the German economy could also cause Italian GDP to stop growing. The latest data released by Istat they have also reduced their estimates for the expansion of the Italian economy, which risks remaining well below 1%.
