Germany, the world’s fourth-largest economy and the economic engine behind the EU project, saw its industrial output decline in December.
Official economic data released by the Federal Statistics Office on Monday showed that Germany’s industrial output declined by 0.3% on a monthly basis in December after an upwardly revised increase of 0.3% in the month prior.
The December industrial output decline came after market analysts had forecast a 0.4% increase.
Overall, production in Germany in 2021 was 3.0% higher than the production levels of 2020. However, last year’s production figure was 5.5% lower than in 2019, before the global pandemic hit economies.
Last year, the German economy grew by 2.8%. However, when compared with the 7% growth that France enjoyed in 2021, Germany’s economic vulnerability has been exposed by the global supply chain bottlenecks and chip import issues that have hit Germany’s export industry.
Germany placed a series of restrictions in the autumn of last year to combat the new wave of COVID which swept across the world and caused a stutter in many economies. Supply chain disruptions particularly hit Germany’s manufacturing sector, which, when combined with national restrictions meant the German economy experienced a contraction of 0.7% in the final quarter of 2021.
What’s Ahead for the German Economy?
The latest data from the Federal Statistics Office doesn’t paint a pretty picture for Germany. However, there are signs that the bottleneck in supply chain distribution is easing. For the first time in seven months, the business morale amongst German businesses increased in January. Manufacturers, which make up a solid core of German GDP, are now showing a more positive outlook.
However, at the end of January, the German government last month cut its economic growth forecast for 2022 to 3.6%. Economy Minister Robert Habeck said that he also expected the German economy to slow down to 2.3% in 2023.
