New data may suggest Germany is veering towards a new post-covid low

The combined picture may confirm that output from Europe’s biggest economy is now running at its lowest ebb since the years after the global financial crisis, apart from the shock of the pandemic

The manufacturing malaise is just one cloud hanging over Germany at a time chancellor Olaf Scholz’s fractious coalition is in disarray. Picture: Kay Nietfeld/dpa via AP, File

The full extent of Germany’s industrial decline in 2023 will be revealed in the coming week with a raft of data that’s likely to hit a new post-pandemic low.

Three days of releases are expected to show monthly numbers for exports, factory orders and production in Europe’s biggest economy all fell in December, according to the median forecasts of economists.

The combined picture may confirm that output from the industrial base long seen as the motor of the region is now running at its lowest ebb since the years after the global financial crisis, apart from the shock of the pandemic.

Industrial heavyweight Siemens reports earnings on Thursday, and may provide additional insight into the extent of the manufacturing malaise that’s just one cloud hanging over Germany at a time chancellor Olaf Scholz’s fractious coalition is in disarray.

While the government succeeded on Friday in pushing through a new budget for 2024, the need to manage almost without a deficit in 2025, following a court ruling against the use of off-balance sheet funding, is likely to keep the three-party alliance at loggerheads.

“Europe’s largest economy has been flirting with recession for several quarters, but has managed to narrowly avoid one so far. Industrial weakness was likely a main driver of the GDP contraction in the final quarter of 2023,” Bloomberg Economic wrote.

Against such a backdrop, Mr Scholz may be glad to escape Berlin and focus on foreign policy matters when he meets US president Joe Biden at the White House on Friday.

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Other officials might find discussing the fate of the economy harder to avoid. German finance minister Christian Lindner is scheduled to speak in Frankfurt on Monday, and Bundesbank chief Joachim Nagel will be at an event in Paris on Friday.

Meanwhile, the European Central Bank is expected to release a survey of consumer inflation expectations this week. 

The banking regulator is scheduled to meet early next month to discuss monetary policy and possible interest rate reductions this year.

Bloomberg