May 2026 INDUSTRIAL POLICY DOSSIER
Industry Report Industrial production and trade in the individual industries
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In view of the weak start to the year and uncertainties regarding the war in Iran, the BDI expects manufacturing output to stagnate this year. This forecast assumes that the fighting in Iran does not flare up again and that free passage is secured through the Strait of Hormuz, a critical chokepoint of global trade, in the near future.
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Another decrease in production is on the cards if the conflict further prolongs disruptions in shipping. This would cause tangible problems in supply chains and bring about the fifth consecutive downward year for manufacturing output.
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In the European Union, production is only set to increase by a slim 0.5 percent this year due to the war. While production in the pharmaceutical industry, vehicle production and other transport equipment is pointing up, the energy-intensive industries remain in recession.
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We expect the global trade in goods to increase by only between one and 1.5 percent in 2026. The goods exports of emerging countries should continue to expand while exports from advanced economies are likely to tread water.
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In 2026 overall, German exports could pick up slightly following three years of downturn. While trade with the United States and China is expected to fall further, EU trade should prop up performance overall.