How do Slovenian companies feel the cooling of the German economy?

The automotive industry in Germany’s largest economy is facing a 17th consecutive month of falling orders. The deteriorating economic environment in Europe’s largest economy has affected Slovenian exporters integrated into the local economy, including the German automotive industry.

According to the data from the German Federal Statistical Office, the German automotive industry has been facing a situation of declining orders for 17 consecutive months. In June, it fell by 0.7% month-on-month and 6.2% year-on-year. The latest data released by the German Statistical Office showed that the export value of automobiles and auto parts fell by 2.4% last year.

“The extreme challenges facing the automotive industry business are also confirmed by the European sectoral Purchasing Managers Index (PMI) data, as well as the index of the German Economic Institute, which shows the sharpest contraction in the automotive sector. This news from the Economic Research (Ifo) is bad news for all of Europe, as Asian manufacturers are increasing their market share and German automotive companies in particular are losing out on markets outside Europe,” warned the chief economist of the Slovenian Chamber of Commerce (GZS). Boyan Ivank.

German industrial orders fall for sixth month in a row

Even so, German manufacturers received fewer orders in June for the sixth straight month. Retail sentiment also deteriorated in July, and traders’ expectations for the coming months became worse, all pointing to the weak state of Europe’s largest economy.

Ivanc estimates that the main reasons Germany faces a drop in orders are poor price competitiveness, higher costs for supplying semi-finished products from Asia, delivery delays and a delay in the transition to electric vehicles.

The deterioration of the economic environment has affected Slovenian exporters that are closely linked to the German economy, including the German automotive industry. “The biggest challenges are faced by Slovenian companies, which are mainly dependent on the European automotive industry. For many years, profit margins here have been low, reflecting only cost coverage and necessary investments,” Ivanc stressed.

He added that Slovenia’s metal and metal products industry was one of the few sectors that saw a small increase, but less than previously forecast, precisely because of weak demand from the automotive industry.

“The future employment dynamics in the Slovenian automotive industry will depend primarily on the production dynamics of Revoz,” predicted Bojan Ivanc, chief economist at GZS.
Photo: STA

Slovenian Airlines increases the number of border crossings

When asked if Slovenian truck drivers have already felt the cooling of the German economy, Ivank replied that the number of trucks crossing the road border crossings increased tenfold in the summer. “Slovenian airlines are not directly feeling the cooling of the German economy. On the labor market, manufacturing activity is weak and the decline in employment is mainly due to the decline in the number of motor vehicle manufacturers. This figure does not include employees of manufacturers of other products in the automotive industry. The future employment dynamics in the sector will mainly depend on the production dynamics of Revoz,” predicted the chief economist of GZS.

Ivanc also said that leading indicators of production in the euro zone were weak in June and July. “This means that the third quarter will not be much better either. “I expect a slow recovery in the last quarter if gas prices do not rise quickly and the European Central Bank (ECB) lowers the central interest rate again. The future also tends to lower it,” Ivanc announced.