Germany’s main industry lobby no longer expects growth in industrial production this year, citing the impact of the Iran war and a sluggish start to the year.
The Federation of German Industries (BDI) now expects at best stagnation, instead of the slight improvement previously forecast, President Peter Leibinger said at the opening of the Hannover Messe trade fair on Monday.
The revised outlook abandons the association’s January forecast, which had projected growth of around 1%.
The BDI pointed to a weak start to the year and warned that the Iran war could even trigger a renewed decline in manufacturing output.
“Industrial production in Germany has declined every year since 2022,” said Leibinger. “For 2026, we no longer expect a recovery, but stagnation.”
According to the BDI, industrial capacity utilization remains low at just over 78%.
The crisis in Iran is adding further uncertainty and weighing on companies, the association said. Prolonged disruptions to shipping could result in a fifth consecutive annual decline in manufacturing production.
He argued that geopolitical developments are not the root cause but are exacerbating existing weaknesses.
“The cause lies with us,” he said, pointing to structural problems including high costs, taxes and bureaucracy. “Germany as a business location is no longer competitive.”
The BDI is urging the German government to agree on a comprehensive reform package by the middle of this year aimed at boosting growth and competitiveness.
