VDMA slashes 2026 production outlook amid ongoing downturn

The mechanical engineering federation VDMA has dramatically revised its 2026 production projection, now foreseeing a real-terms contraction that continues a four-year streak of declines. The first seven months of the year were so weak that earlier modest growth estimates could no longer be justified. This is the second forecast adjustment this year; a June outlook had only anticipated stagnation.

VDMA also updated its 2025 data, reducing the previously reported decline after re-evaluating the figures. Despite the bleak near-term picture, the association expects a turnaround in 2027, citing a stronger order intake and modestly improved business sentiment. However, it warned that geopolitical uncertainty, higher interest rates, and Germany’s competitive challenges could jeopardise the recovery. VDMA chief executive Thilo Brodtmann criticised the EU Commission’s understanding of the industrial situation and called for immediate measures to bolster Europe’s manufacturing base.