German industrial production and exports continued to increase slightly in June, according to data released by the German Federal Statistical Office (Destatis) on August 7.
However, analysts warn that the German economy still faces many risks from conflicts in the Middle East and hot weather causing river water levels to drop.
German exports in June increased by 0.9% compared to the previous month, reaching 139.3 billion euros, the highest level since September 2022. Meanwhile, industrial production increased by 0.2% compared to the previous month.
According to Destatis, production increased the most in the automobile and transportation equipment industry, while exports to European Union (EU) member countries recorded the strongest increase.
The German industry has shown surprising resilience, even though the conflict in the Middle East is causing energy prices to rise, said Carsten Brzeski, an economist at ING bank.
Despite the conflict in the Middle East and rising energy prices, industrial production has maintained stability," he said.
A series of more positive economic data than forecast recently raises hope that the German economy is better resilient to the impact of the conflict in the Middle East, which has seriously disrupted energy supplies and petrochemical products passing through the Strait of Hormuz.
Previously, on August 6, Destatis said that industrial orders in June - an indicator reflecting future production activities - had increased much more strongly than forecast.
In addition, a survey by the Ifo Institute for Economic Research shows that business confidence in Germany in July increased for the 3rd consecutive month.
However, Mr. Brzeski warned that the situation could become more complicated if the conflict in the Middle East escalates or the water level on the Rhine continues to drop, disrupting the transportation of goods for industrial production.
The immediate outlook for the German economy currently depends greatly on energy prices, the developments of conflicts in the Middle East and the current heatwave," he said.
The water level of the Rhine River has dropped to a record low in the Kaub region, western Germany in the context of hot and less rainy summer. This increases transport costs on the waterway route, which accounts for about 80% of Germany's inland waterway freight traffic.
