BERLIN, May 21 (Xinhua) -- The competitiveness of German industry within the European Union (EU) and on global markets has been declining for the last two years, according to a report published on Tuesday by the ifo Institute for Economic Research.
German companies have reported losing their competitive edge within the EU since the third quarter of 2022, according to ifo. On non-European markets, this process was already being observed six months earlier.
"It is becoming increasingly difficult for German industry to stand up to the competition," said ifo expert Klaus Wohlrabe. At the start of this year, almost all sectors saw their standing further deteriorating compared to the final quarter of 2023.
Following a mild recession in 2023, German industrial output is expected to continue its downward trend this year, falling by 1.5 percent year-on-year, according to the Federation of German Industries (BDI). At the same time, exports are set to stagnate.
The industry of Europe's largest economy "has not yet recovered from the cost and demand shocks, from extremely high energy prices at times and from inflation," said BDI president Siegfried Russwurm last month.
Due to competitive disadvantages caused by high energy and labor costs, Germany is becoming increasingly unattractive to investors. In recent years, the country recorded high investment outflows, prompting the German Economic Institute (IW) to warn of the onset of deindustrialization.
Alarm bells from the industry are also growing louder. "Many relocations are taking place -- to all over the world," Stefan Wolf, president of the Federation of German Employers' Associations in the Metal and Electrical Engineering Industries, said on Tuesday.
Companies in the automotive and supplier industry have been particularly affected. "If things don't change quickly, we will see a reduction in jobs, especially in the more basic activities such as production," he added, warning of the loss of up to 50,000 industrial jobs. ■