Unexpected Increase in German Factory Orders: 7.8% Rise

Surprising Increase in Factory Orders in Germany

Germany recorded an unexpected increase of 7.8% in factory orders, marking the fastest rise in the last two years. This situation strengthens expectations of a recovery in the manufacturing sector.

Demand Increase and Economic Expectations

The German Statistical Office announced on Thursday that the increase in demand in December was a contrary result to economists' expectations of a 2.2% decline. It was emphasized that the increase was primarily driven by domestic demand.

The Ministry of Economy also stated that foreign orders tend to remain weak due to trade and geopolitical uncertainties.

Germany's Economic Future

As Europe's largest economy, it is critical for Germany to experience a revival in industrial activities for sustainable economic growth. The country's near escape from recession in 2025 has led Chancellor Friedrich Merz to intensify efforts to stimulate growth.

The government foresees that GDP could rise by 1% this year, especially with increases in infrastructure and defense spending. Meanwhile, Deutsche Bank is making a more optimistic growth prediction of 1.5%.

Ongoing Risks and Structural Problems

However, the German economy faces risks such as changes in trade policy by U.S. President Donald Trump and competition from China. Furthermore, ongoing issues like excessive bureaucracy and a shortage of skilled labor continue to pose challenges. Bundesbank President Joachim Nagel and many economists expect Merz to fulfill his commitments to reduce bureaucracy and enhance competitiveness.