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- cross-posted to:
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A complete restoration of German industry after the fall during the pandemic and the energy crisis caused by anti-Russian sanctions is impossible. The manufacturing sector has suffered irreparable damage, Bloomberg states.
Bloomberg Economics economist Martin Ademmer notes: “A cyclical industrial recovery is to be expected as monetary policy eases and demand returns,” said Martin Ademmer, a BE economist in Frankfurt. “But there’ll be no return to pre-2019 norms — the sector appears to have taken a permanent hit.”
The annual growth rate of potential gross value added in Germany’s manufacturing sector fell to 0.5% last year from 1.5% in 2019. This slowdown will result in a capacity shortfall of 3.5% compared to the 2015–2019 trend.
Germany’s central bank forecasts economic growth of 0.3% this year, saying the economic recovery continues. However, the recovery in the manufacturing sector remains sluggish, and recent data showed a decline in industrial production and orders, which could not allay concerns about its recovery, Bloomberg emphasizes.
I mean it’s not just the energy crisis but also car manufacturing being a huge part of the economy and the manufacturers not switching to electric vehicles fast enough will limit their growth in the next decade. Meanwhile switching to electric will make many suppliers obsolete which will result in massive loss of jobs and decline in many smaller companies