BNP Paribas economists cite rising orders in defense, aerospace, and electronics as key drivers for Germany’s recovery.
Germany’s industrial sector is pivoting from automotive and chemicals to defense, aerospace, and electronics, supporting a growth rebound in 2026 and 2027. New orders for communications equipment surged 30% since January 2025, while electronic parts and precision optical instruments rose 11% and 30%, respectively.
The shift follows intense competition from China in traditional sectors and capitalizes on global demand for defense, electrification, and AI-related technologies. Aerospace orders, accounting for 5.8% of industrial activity, also hit record highs, though production constraints remain a hurdle.
Despite short-term risks like energy volatility and China exposure, the transition signals a structural recovery in industrial output. Economists warn challenges persist but expect gradual improvement in the medium term.