Germany’s industry won’t be able to fully shake off the impact from its downturn of the past years, according to research by Bloomberg Economics.

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.

https://archive.ph/cMDLg