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Business Cycle Germany
Germany
Industrial production has fallen considerably in recent years. In the third quarter, it was about 10 percent below its level in 2019. For the economic outlook, it is important to know how much of the lower production is due to cyclical or temporary factors, and how much is due to a permanent decline in production capacity. Given the importance of manufacturing for the economy as a whole – its share in total gross value added was around 20 percent in 2023 – this has important implications for GDP and potential output. However, production capacity cannot be observed and therefore must be estimated. To this end, we use surveys of capacity utilization in manufacturing and evaluate the results using other indicators.
