VDMA Engineering Association Outlook

(Reuters) – Germany's VDMA engineering association stated on Tuesday that it expects production in the sector to decline next year, albeit at a slower rate than in 2024. The association highlighted the risk of slight job cuts due to declining orders impacting capacity utilization.

The VDMA projected that production would decrease by 8% in 2024 and 2% in 2025, maintaining its previous forecast. The association warned of increasing competition from China and new challenges arising from developments in the U.S. under Trump's presidency.

"A growing number of companies can no longer adequately cushion production through their order backlogs amidst sharply declining orders," said VDMA President Bertram Kawlath in a statement.

Kawlath noted that falling interest rates could enhance consumption and stimulate investment, potentially leading to an economic recovery next year. However, he predicted that the recovery may not be dramatic due to ongoing conflicts, protectionism, and structural breaks affecting the global economy.