Germany machinery sector to see fourth year of decline

BERLIN: Germany’s machinery and equipment industry is expected to shrink for a fourth consecutive year in 2026, with production forecast to fall 2percent in real terms, the VDMA said on Thursday, cutting its earlier forecast of stagnation.

The downgrade reflects weak output this year, with production down 4.1percent in the first seven months from a year earlier, despite signs that demand was improving.

However, the sector group said 2027 should mark a turning point, forecasting real production growth of 3percent. “The improved order situation and slightly brighter expectations suggest production will grow again in 2027,” VDMA chief economist Johannes Gernandt said. Price-adjusted orders rose 5percent in the first seven months of 2026, driven by a 14percent increase from non-euro zone countries. Business expectations have also improved.

Still, domestic demand remains weak and the recent pickup has yet to spread across the broader machinery sector, limiting the near-term production outlook, the group said.