In an already tense economic situation, the consequences of the war in the Gulf region have further clouded the outlook for mechanical and plant engineering in Germany. Therefore, VDMA economists are lowering their real production forecast for the current year from previously plus 1 percent to plus/minus 0 percent. 'We expect that real production will not grow in 2026 compared to the previous year,' says VDMA chief economist Dr. Johannes Gernandt.
Despite the order increases in the first four months – from January to April 2026, real orders increased by 3 percent – many companies remain underutilized. Technical capacities were significantly below the average value of 85.6 percent at 77.8 percent in April. 'The war in the Gulf region, which has been ongoing since the end of February, has increased global uncertainty, driven inflation, and set us back. The issue of supply chains is also becoming a stronger burden again. Specifically, 15 percent of mechanical engineering companies are now reporting problems here. Even if the situation at the Strait of Hormuz relaxes quickly, it will take some time for global trade to normalize again,' explains Dr. Gernandt.
Production in mechanical and plant engineering in Germany was 2.6 percent lower in real terms in the first four months of the current year compared to the previous year. 'The expected economic recovery will continue to be delayed. However, we are optimistic that the situation will improve over the course of the year. Due to the weak start to the year, the momentum will not be sufficient to turn production into positive territory for the entire year,' says the VDMA chief economist.
In the long term, VDMA economists remain optimistic. The global demand for innovative machines and plants remains high. 'We have the technologies to master the diverse challenges of our living environment,' emphasizes Dr. Gernandt. 'And domestically, the momentum from the unanimous proposal of the pension commission gives us hope. We should not overanalyze this now, but rather use the momentum to decide on further reforms in health insurance, taxes, and the labor market. Only in this way can we strengthen the competitiveness of the location Germany.'
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