‘It’s getting worse’ The German economy is on the verge of collapsing as supply shocks hammer the auto industry’s behemoths.
THE AUTO INDUSTRY IN GERMANY is on the verge of collapse, putting the European Union’s economic recovery strategy in doubt.
A global supply shortage is threatening to derail Germany’s economic recovery, with the auto industry taking the brunt of the blow. BMW, Siemens AG, and Volkswagen have all reported a shortage of resources ranging from simple wooden pallets to memory chips.
“In my career, we haven’t had a situation with so many commodities being scarce at the same time, and I’ve been working with the same materials since 1996,” Thomas Nuernberger, managing director of sales at Mulfingen, Germany-based EBM Papst, a manufacturer of industrial fans, told Bloomberg.
“This is the most difficult situation I’ve ever seen in the global supply chain.”
“I expect growth to be postponed until 2023,” he said, “because we will still have problems with semiconductors in 2022, and the container shipping chaos will extend well into 2022.”
According to Bloomberg Economics, as of June, German companies were still running at roughly 7% below pre-pandemic levels, with automakers and machinery manufacturers in particular falling behind.
“Things are actually growing worse rather than better,” said Clemens Fuest, president of the Munich-based Ifo institute.
Last month, Siemens CEO Roland Busch warned that a global chip scarcity and rising material costs could push the recovery “far beyond 2022.”
Volkswagen CEO Herbert Diess told Bloomberg TV that his business, Europe’s largest automaker, “would suffer some hits in the third quarter since manufacturing is severely constrained right now.”
In July, the company’s global car deliveries fell 19 percent.
“Despite a spike in orders, Germany’s industrial recovery has been impeded by significant supply disruptions,” said Maeva Cousin, senior euro-area economist at Bloomberg Economics.
“We expect the industrial sector to begin contributing positively to growth in the third quarter.
“Admittedly, progress will be slow and rocky, but as long as services respond quickly to the reopening, the impact on growth should be minimal.”
After a higher-than-expected inflation figure and a request from an ECB policymaker to stop the bank’s emergency bond purchases as soon as the next quarter, benchmark German bond rates jumped to their highest level in over five weeks on Tuesday.
The governor of Austria’s central bank, Robert Holzmann, said the bank was in a position where it might consider cutting purchases, and that he anticipated it to do so. “Brinkwire News in Condensed Form.”