The German economy faces its worst slump in orders since the 2009 crisis, as over 41% of companies reported insufficient demand in October, a rise from 39.4% in the previous survey. The Munich-based ifo Institute highlighted that this lack of orders is stalling economic growth across almost all sectors, reaching levels unseen even during the pandemic.
“Economic development in Germany is being hindered by a widespread lack of orders,” said ifo economist Klaus Wohlrabe. “Few industries have been spared.” Manufacturing companies have been especially hard-hit, with 47.7% reporting a decline in orders, and the basic metals sector seeing the highest drop, with 68.3% noting a lack of demand. The automotive and chemical industries also struggled, with around 44% of firms citing insufficient orders.
The trade sector, too, recorded its highest rate of order shortages since at least 2006, with 65.5% of trade companies and 56.4% of retail businesses experiencing declines in orders. Service providers faced a slightly better environment, but demand among recruitment agencies waned as temporary workers fell out of favor with companies tightening budgets.
Raw Material Dependencies Heighten Economic Risk
Adding to Germany’s challenges, the Federation of German Industries (BDI) issued a warning about the country’s dependency on critical raw materials, including lithium and rare-earth metals, largely sourced from China. Should Chinese lithium exports be suspended, German industries could face a revenue shortfall of around €115 billion, affecting approximately 15% of the country’s industrial output. The automotive sector, which relies heavily on lithium for electric vehicle production, is particularly vulnerable.
“Germany’s dependency on China for essential resources puts the nation’s industry at risk,” said BDI president Siegfried Russwurm. With 50% of Germany’s lithium imports now coming from China—up from 18% in 2014—Germany’s reliance on strategic materials has deepened, threatening competitiveness in the global market.
Calls for a More Resilient Supply Chain
To counter this dependency, the BDI urged political action to diversify raw material sources, strengthen local extraction, and accelerate recycling technology development. Establishing a circular economy, the association said, would reduce the need for imports and shield the economy from potential disruptions in the supply chain.
As Germany grapples with both a downturn in orders and growing supply chain vulnerabilities, the pressure is mounting on policymakers to ensure the long-term stability of Europe’s largest economy.
