German industry warns of stagnation in 2026 as outlook deteriorates

Germany’s main industrial association, the Federation of German Industries (BDI), has announced that it no longer expects growth in industrial production in 2026 and now forecasts stagnation instead.

The head of the group, Peter Leibinger, said at the opening of the Hannover Messe trade fair that the outlook has been downgraded following a weak start to the year and the economic consequences of the conflict in Iran, Caliber.Az reports, citing foreign media.

The association had previously expected growth of around 1%.

BDI estimates that German industrial output has been declining since 2022, while capacity utilisation remains just above 78%.

The new downturn increases uncertainty and could mark a fifth consecutive year of contraction.

Leibinger stressed that geopolitical tensions are only exacerbating existing structural problems, including high costs, taxes, and bureaucracy.

“Germany as a business location is no longer competitive,” he said.

BDI has called on the government to present a package of economic reforms by mid-year to stimulate growth and improve the competitiveness of the country’s industrial sector.

By Bakhtiyar Abbasov