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The VDMA Engineering Group in Germany has seen a weak recovery this year

The VDMA Engineering Group in Germany has seen a weak recovery this year

The VDMA association reported on Monday that geopolitical conflicts, U.S. tariffs, and general uncertainty have clouded the prospects for a robust recovery.

The engineering group reiterated its forecast and also called on Germany's new government to implement deep reforms including tax cuts, reducing regulations, and other measures to end what it described a paralysis of Europe's largest economy.

In a press release marking the opening of the Hannover Messe, the BDI industry group echoed these calls but predicted a slightly less drastic decline in production this year of 0.5%.

Ralph Wiechers, chief economist at the VDMA, said on the first day that the low point in production was reached during the first quarter. A recovery has begun - but hesitantly and not uniformly.

The VDMA predicted a decline of 8%, but the 7.2% was slightly less than that. It said that capacity utilisation in January was 78% due to the lack of new orders, and the depleted backlogs.

Around 1 million people are employed in the sector, which includes well-known German names like Siemens and Thyssenkrupp. Reporting by Tom Kaeckenhoff, Christian Kraemer and Madeleine Chambers and Rachel More.

(source: Reuters)