Fragile supply chains
The industry continues to be weighed down by high levels of uncertainty in the economic and geopolitical environment. The sharp rise in energy prices as a result of the Iran war is placing additional pressure on energy-intensive industrial sectors. At the same time, volatile raw material prices, rising transport costs and fragile international supply chains are creating persistently difficult conditions along industrial value chains.
The overall economic outlook also remains subdued. The German Council of Economic Experts expects Germany to achieve price-adjusted economic growth of just 0.5 per cent in 2026, while inflation is likely to reach 3.0 per cent, significantly higher than previously anticipated. The combination of weak industrial demand, increased cost pressure and ongoing uncertainty is currently making economic stabilisation more difficult.
Postponed investments
In addition, the current pressures are meeting pre-existing structural challenges facing Germany as an industrial location. High energy and production costs, growing regulatory requirements and weak investment momentum continue to have a noticeable impact on the competitiveness of many companies, according to ArGeZ. Production and capacity planning is being assessed more cautiously, investments are being postponed and medium-term growth prospects are increasingly viewed with scepticism.
ArGeZ concludes: “The results for May make it clear that the German supplier industry remains under considerable pressure. While the current situation is stabilising at a low level, doubts about a short-term economic recovery continue to grow.”
