BERLIN, April 20 (Reuters) - German industry is expected to stagnate at best in 2026, the BDI industry association said on Monday, warning that higher energy costs, supply chain risks and domestic structural weaknesses were piling pressure on Europe's largest economy.
At the opening of the Hannover Messe trade fair, BDI lowered its outlook after a weak start to the year and said the conflict in Iran had added fresh downside risks, including costlier energy, broader price pressures and disruptions to shipping and logistics.
"Since 2022, industrial production in Germany has fallen every year. For 2026, we no longer expect a recovery, but stagnation," BDI President Peter Leibinger said.
Germany's manufacturing sector could even contract for a fifth straight year if shipping disruptions persist, the association said. Industrial output remains well below earlier levels and capacity utilisation is only a little above 78%, Leibinger added.
He said Germany's weakness was primarily structural, citing high labour, tax, bureaucracy and energy costs that had eroded the country's competitiveness.
Leibinger urged the government to agree by summer on a broad reform package to spur growth and investment, including tax relief, dependable investment incentives and less red tape.
He also called for faster, more digital public administration and said policymakers must move beyond short-term crisis responses now.
Reporting by Maria Martinez, Editing by Linda Pasquini
Source: Reuters