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Press Release: Germany 2020 - Moderate Growth Despite Weak Industry

Bad Homburg, 12/30/2019
from Axel D. Angermann, FERI AG
  • Industrial production in 2020 lower than in 2019
  • Construction industry increasingly suffering from capacity constraints
  • Development of 5G networks brings strong growth to IT sector

The German economy can hope for a recovery in 2020, but the growth momentum remains very moderate. The industry winners are telecommunications and information technology. In contrast, car sales are likely to decline in 2020 and the construction industry will continue to reach its capacity limits. "Although the export-oriented industrial sectors will recover in 2020, overall they will still produce less than in 2019. The demand for construction services will remain high, and the imminent roll-out of 5G networks will provide a strong boost to telecommunications," says Axel Angermann, Chief Economist at FERI, summarising the results of the economic forecast for the new year from an industry perspective.

Industrial Production Continues to Decline

After two years of decline, the industrial recession is likely to bottom out at the beginning of 2020. Nevertheless, production continues to decline slightly by an annual average of -0.4 percent. This forecast alone already shows that Germany can expect only a moderate recovery in the overall economy. Taking a closer look at the individual industrial sectors, one can notice that among the large sectors, electrical engineering alone can expect an increase in production next year. By contrast, the mechanical engineering sector is still suffering from the significant slump in incoming orders and production in 2019, where the recovery will take some time, which is why there will be a significant drop in production for the new year as a whole. The car industry could receive new impetus from the economic recovery as well as the introduction of new models and the expansion of the range of electric vehicles. In Germany itself, however, the number of registrations is likely to decline compared to 2019. Car production in Germany is also suffering from the fact that German manufacturers are increasingly relocating their production to other countries. Preferably to Eastern Europe because of production costs or to the USA to avoid car customs duties. Overall, the industry forecast is subject to considerable downward uncertainty: a stabilization of China's economic situation and a lack of escalation in trade conflicts are prerequisites, as is continued solid growth in the US economy.

Digitization as a Growth Driver

As in previous years, the service sector has much better growth prospects than the industry sector. Business-related services such as leasing as well as legal and tax advice and auditing will remain a pillar of the economy in 2020. These industries, like the information and telecommunications sector, are growing noticeably faster than the economy as a whole. The IT sector is benefiting in particular from the ongoing digitization. Information technology services, which include software programming, and telecommunications are expected to increase their sales growth again in 2020 compared to 2019. The reason for this is  primarily the need for investment in the expansion of 5G mobile communications infrastructure.


About Axel D. Angermann

As Chief Economist of the FERI Group, Axel D. Angermann analyses the economic and structural developments of all markets that are important for asset allocation. This data forms the basis for the strategic orientation of FERI's asset investments.

Angermann has been responsible for the analyses and forecasts prepared by FERI for the overall economy and individual sectors since 2008. He joined the company in 2002 as an industry analyst. His professional career began at the Max Planck Institute for Economics and the German Chemical Industry Association. Angermann studied economics in Berlin and Bayreuth.


About FERI AG

Founded in 1987 and headquartered in Bad Homburg, Germany, the FERI Group has developed into one of the leading investment houses in the German-speaking area. FERI offers tailor-made solutions for institutional investors, family assets and trusts in the following areas:

•    Investment Research: macroeconomic forecasts and asset allocation analyses
•    Investment Management: institutional asset management and private wealth management
•    Investment Consulting: advisory services for institutional investors and family offices

The FERI Cognitive Finance Institute was formed in 2016. It is the strategic research centre and creative think tank of the FERI Group. The Institute focuses on innovative analyses and the development of methods for long-term oriented economic and capital market research. 

FERI and MLP currently have assets of EUR 38.1 billion under management. A total of EUR 8.5 billion of these assets are alternative investments. The FERI Group is headquartered in Bad Homburg and has offices in Dusseldorf, Hamburg, Luxembourg, Munich, Vienna and Zurich.



Media relations contact

Katja Liese

Member of the Management Board

Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192

F +49 (0) 6172 916-1192

presse@feri.de

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Rathausplatz 8-10

D-61348 Bad Homburg

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Katja Liese
Member of the Management Board
Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de

FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg

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Katja Liese
Member of the Management Board
Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de

FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg

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