Which sectors will boom in 2020?

Feri chief economist Axel Angermann

After two years of continuous downturn, the industrial recession is likely to bottom out at the beginning of 2020. Nevertheless, production continues to decline slightly by an annual average of -0.4 percent. This prognosis alone shows that Germany can only expect a moderate recovery in macroeconomic terms. If you take a closer look at the individual industrial sectors, it is noticeable that, among the major sectors, electrical engineering alone can expect an increase in production in the next year.

Car production in Germany suffers

Mechanical engineering, on the other hand, is still suffering from the significant slump in incoming orders and production in 2019. The recovery will take some time here, which is why there will also be a clear decline in production overall for the new year. The economic recovery as well as the introduction of new models and the expansion of the range of electric vehicles could give the auto industry new impetus. In Germany itself, however, the number of registrations is likely to be lower than in 2019.

Car production in Germany is also suffering from the fact that German manufacturers are increasingly relocating their production to other countries. Preferably to Eastern Europe because of production costs or to the USA to avoid car tariffs. Overall, the industry forecast is fraught with considerable downside uncertainty: a stabilization of the economic situation in China and a lack of escalation in the trade conflicts are just as essential as sustained solid growth in the US economy.

Digitization as a growth driver

As in previous years, the service sector has significantly better growth prospects than industry. Company-related services such as leasing as well as legal and tax advice and auditing will remain a pillar of the economy in 2020. These industries, like the information and telecommunications sector, are growing noticeably faster than the economy as a whole. The IT industry is benefiting in particular from advancing digitization.

Information technology services, which include software programming, for example, and telecommunications are likely to increase their sales growth again in 2020 compared to 2019. The main reason for this is the need for investment in expanding the 5G mobile communications infrastructure.