Capital Economics: Germany's energy-intensive industries may show temporary resilience, but structural pressures persist

Golden Ten Data reported on May 8 that Franziska Palmas, a macroeconomist at Capital Economics, stated in a report that despite shocks from the Iran conflict, production activity in Germany's energy-intensive industries may continue to show some resilience in the coming months. Data shows that Germany's industrial output in March fell 0.7% month-on-month, but output in energy-intensive sectors grew by 1.2%. Palmas noted that this could be because industrial electricity prices in March remained largely unchanged. As electricity prices saw a further slight decline in April, this trend may persist. Compared with 2022, Germany's vulnerability to the current surge in energy costs may have decreased, as some of the least efficient production facilities have been permanently shut down. More broadly, structural headwinds—including weak European demand and intensified overseas competition—mean that regardless of developments in the Middle East, Germany's industrial output may remain sluggish.