The Ukraine war is causing problems for the German economy: trade sanctions, production losses and disrupted supply chains are creating uncertainty. Industrial production barely increased in April.
German industry increased its production only slightly in April. Compared to the previous month, total production increased by 0.7 percent, as reported by the Federal Statistical Office in Wiesbaden.
Experts had expected a clearer increase of 1.2 percent. The very weak result from March was corrected from minus 3.9 to minus 3.7 percent.
“German industrial production is currently being dampened by the Russian war of aggression,” commented the Federal Ministry of Economics. On the one hand, as an export-oriented country, Germany is more severely affected by the trade sanctions against Russia. On the other hand, war-related production losses and disrupted supply chains result in a shortage of important intermediate goods. “The outlook is currently characterized by great uncertainty.”
Production in April was boosted primarily by the energy sector, which increased its output by around 16 percent. In contrast, the manufacture of goods in industry rose by only a meager 0.3 percent. While car production increased by 6.8 percent after a weak March, production in mechanical engineering, which is also important, fell by one percent. “In general, the high prices for electricity, gas and oil make many production processes more expensive in the short term,” the ministry said.
Commerzbank expert Ralph Solveen was disappointed with the current development. He also pointed to orders data for April, which were also weak on Tuesday. Expert Elmar Völker from Landesbank Baden-Württemberg was a little more confident: After the sharp setback in March, the current recovery is a cautiously positive sign. “At least for the time being there is no slipping into a steep downward spiral.” However, the environment for industry remains difficult.