German industry will face stagnation in 2026 – BDI

The industry association has lowered its forecast following a weak start to the year and amid the war with Iran

German industry will face stagnation at best this year, according to the BDI industry association. This was reported by Reuters.

The BDI warned that rising energy costs, supply chain risks, and internal structural weaknesses are putting pressure on the German economy.

The association downgraded its forecast following a weak start to the year and amid escalating tensions in the Middle East.

According to the report, Germany’s industrial production fell by 0.9% year-on-year last year. The BDI notes that the country’s manufacturing sector could contract for the fifth consecutive year if shipping disruptions persist.

As of early 2026, no economic recovery had yet been observed in the industrial sector. The pace and timing of its growth depend largely on the intensity and duration of the war with Iran, the consequences of which are not yet reflected in current indicators.

The BDI also notes the poor performance of certain sectors compared to other European countries.

BDI President Peter Leibinger called on the government to agree on a broad package of reforms by summer to stimulate growth and investment, including tax breaks, reliable investment incentives, and a reduction in bureaucratic procedures. Furthermore, he believes that policymakers must now move beyond short-term crisis responses.

As a reminder, in February 2026, industrial production in both the European Union and the eurozone, adjusted for seasonal fluctuations, rose by 0.4% compared to the previous month. On an annual basis, the figure fell by 0.1% in the European Union and by 0.6% – in the eurozone.