Sunday 21 November 2021
Corona, bottlenecks, lack of material
German industry sees “massive risks”
According to the BDI, production bottlenecks and material shortages place a greater burden on the production of German manufacturers than in other industrialized countries. The fourth corona wave could exacerbate the problem.
The concerns of German industry, which is suffering from a lack of materials, are growing in view of the rapidly increasing number of corona infections. “The recent development of the international infection process massively increases the risks for industrial production this winter,” said Joachim Lang, General Manager of the Federation of German Industries (BDI). “Even without new public corona restrictions, there is a risk of renewed noticeable reluctance to buy. Fortunately, the order books in many industries are currently still well filled.”
However, many manufacturers cannot process the order books as usual due to delivery bottlenecks. This dampens production, as the BDI’s current industry report shows. According to the latest data from the Federal Statistical Office, industrial production had recently fallen. According to the BDI, it hits hard among other things, the car manufacturers who suffer from a shortage of raw materials and semiconductors.
“We expect production in the manufacturing sector to increase by only four percent in 2021 – half as much as before,” said Lang. In order to reach the level before the Corona crisis, German industry would then have to grow by seven and a half percent in the coming year.
Eleven percent output gap
According to the BDI, German industry suffers from a particularly large gap in production compared to the pre-crisis period. The association puts the gap for the two years 2020 and 2021 at a good eleven percent. No other industrialized country would have to cope with such severe losses. France is likely to lose almost eight percent, the US a little more than seven percent, the UK around five and Italy around four percent.
The BDI is more confident about exports, even if exports of goods “Made in Germany” have recently lost momentum. Even if it stagnates until the end of the year, German exports are likely to rise nominally by twelve percent for the full year 2021, including price increases, and thus slightly exceed the pre-crisis level of 2019. In the first nine months, goods exports had increased by more than 14 percent compared to the same period in the previous year.
German industry lowered its economic expectations for the current year in September. The association therefore expects economic output to rise by three percent in real terms for the year as a whole. The BDI had previously assumed an increase of 3.5 percent.