Industrial production falls: sharpest decline since corona began

Supply shortages and material shortages are among the consequences of the Ukraine war. This also has a strong impact on German production. Compared to the previous month, it shrank by 3.9 percent.

As a result of the war in Ukraine, production in German industry dropped significantly in March. According to preliminary data from the Federal Statistical Office, total production decreased by 3.9 percent compared to the previous month. The Wiesbaden authority explained on Friday that there had been a stronger decline at the beginning of the corona crisis in April 2020 with 18.1 percent at that time.

Supply shortages and material shortages worsened as a result of the war. For example, missing wiring harnesses from Ukraine caused the car industry a lot of trouble in March. After the last five increases in a row, industrial production has experienced a severe slowdown, mainly due to the Russian war in Ukraine, the Federal Ministry of Economics said.

In the automotive industry, production slumped by 14.0 percent in March. Mechanical engineering, which is also important, recorded a decline of 5.3 percent. For the industry, which was already burdened by supply shortages of important intermediate goods last year, the war with the associated high raw material prices represents a new damper, the ministry explained.

80 Percent of companies complained about bottlenecks

According to the Ifo Institute for Economic Research, a good 80 percent of the surveyed industrial companies complained in March about bottlenecks and problems in the procurement of intermediate products and raw materials. Commerzbank Chief Economist Jörg Krämer expects industrial production to continue to decline in the coming months. “On the one hand, China’s zero corona policy is halting supplies for German industry. On the other hand, Putin’s war of aggression is unsettling consumers and companies in this country.”