Economic upswing visible: trend reversal in sight

Economic upswing visible: trend reversal in sight

After months of economic downturn, the federal government finally sees light at the end of the tunnel. According to the current monthly report from the Federal Ministry of Economics, the latest economic indicators point to a trend reversal. Despite the overall situation still being inconsistent, these signal a gradual economic stabilization.

What is particularly encouraging is the noticeable recovery in industrial production since the beginning of the year, especially in energy-intensive sectors. At the same time, construction production rose sharply. The normalization of sick leave, after a significant increase at the end of 2023, is likely to have contributed to catch-up effects in production. Despite favorable weather effects, industrial orders developed downwards, which led to a reduction in companies' order books.

The ministry emphasized that trade in goods tended to develop positively. However, developments in retail have remained weak until recently, despite the gradual stabilization of purchasing power and the continued increase in employment. The mood in both industry and consumers has brightened significantly since the beginning of the year. A slight recovery can also be seen in foreign trade. Nevertheless, the risks remain high due to the still weak order situation and the ongoing geopolitical uncertainties, particularly in the Middle East.

The leading economic research institutes are only forecasting mini-growth of 0.1 percent for the current year. A stronger increase in gross domestic product of 1.4 percent is not expected until 2025.