Forecast Report

Macroeconomic and sector-specific framework conditions

The macroeconomic perspective presented here, which takes into account the diverse industry segments and regional sales markets served by NORMA Group, forms the basis of NORMA Group’s forecast and outlook for the 2026 fiscal year.

Global economy 2026: no noticeable recovery yet, but Asia remains on the upswing

The effects of the new US trade policy are also likely to overshadow the global economy in 2026, as the tariff increases agreed in 2025 will now take effect throughout the year. In addition, the escalation of the Greenland conflict could lead to a trade war between the US and Europe, which would have a significant impact on the entire global economy. Furthermore, there are still no signs of an end to the war in Ukraine; instead, Russia is increasingly directing its hybrid aggression against NATO states in Europe. Furthermore, military confrontations in the Middle East (Gaza, Iran) and the smoldering conflicts between China and Taiwan could further escalate. In this mixed situation, both the global economy and the previously rule-based geopolitical world order are in a state of upheaval. The uncertainties in 2026 are correspondingly high and the challenges for the global economy remain complex. Initially, there are signs of a slowdown in global economic momentum. However, according to the IfW, upward momentum is likely to develop gradually, particularly from private consumption. The main reasons for this are low inflation thanks to lower energy prices and rising real wages in many countries. In addition, investment activity should start to recover, also stimulated by the accelerated integration of AI into production facilities and business processes. Monetary policy conditions are mixed: While the US Federal Reserve (Fed) is likely to loosen its monetary policy further in 2026, the European Central Bank (ECB) is expected to keep key interest rates stable in 2026. In its January 2026 forecast, the International Monetary Fund (IMF) assumes that the global economy will once again grow by 3.3%. This means that growth expectations have been raised compared to the fall outlook (+3.1%). While growth of 1.8% is expected in the industrialized countries, the developing and emerging countries are expected to remain on course for expansion with growth of 4.2%. Asia’s emerging markets are also expected to grow strongly in 2026. The drivers are population growth, ongoing urbanization, and structurally high investments in infrastructure. Nevertheless, the pace of economic expansion in China is expected to slow in 2026. According to the IfW, this is due to the unresolved real estate crisis, uncertainty among consumers and companies, demographic stress factors, and the high level of debt of many regional governments. With the new five-year plan for 2026 to 2030, the Chinese government is likely to attempt to counteract deflation and boost domestic demand. Other countries in Southeast Asia are benefiting from the fact that many production facilities are being relocated from China to these regions as a result of the trade disputes. Accordingly, the growth prospects are positive for 2026 in the ASEAN-5 countries (+4.2%) and Vietnam (+6.3%). Although the pace of growth in India is expected to level off in 2026, expansion will remain above average at an anticipated 6.4%.

For the USA, experts expect that higher tariffs will have a dampening effect on imports over the course of 2026 and that the associated burdens will gradually be passed on to consumer prices. As wages are rising only moderately and the labor market is faltering, private consumption is losing momentum. On the other hand, impetus from the AI boom should continue to support investment activity. In addition, falling interest rates, lower corporate

taxes, and higher government spending on the military and border surveillance should provide economic stimulus in 2026. Overall, gross domestic product (GDP) in the US could even grow somewhat more robustly in 2026 than in the reporting year. According to experts, economic momentum will remain subdued in 2026 in other major industrialized countries including Canada (+1.6%) and South Korea (+1.8%). Despite the expansionary fiscal policy, growth in Japan is expected to flatten out again and only reach 0.7%.

In this globally strained environment, Europe is facing comprehensive security policy and economic challenges. The economic outlook remains correspondingly gloomy, with the economy likely to achieve only moderate momentum amid persistently high uncertainty. Although rising real incomes are supporting private consumption and investment activity should gradually pick up, foreign trade remains under pressure as a result of high US tariffs and increased competition with China. The availability of important raw materials and primary products such as battery components or microchips could be impaired in the event of new geopolitical tensions. No new monetary policy stimuli are expected in 2026, while the signals from fiscal policy for 2026 are very mixed. The UK, France, Italy, and the Netherlands are focusing on budget consolidation. In contrast, Germany intends to stimulate the economy with debt-based special budgets and eliminate structural shortcomings. The IMF expects growth of 1.3% in the eurozone in 2026. The outlook for the UK and Switzerland is also subdued.

In Germany, too, there are still no signs of a self-sustaining upturn in 2026. Structural problems, locational disadvantages, and the uncertain global environment continue to weigh on the outlook. According to an analysis by the ifo Institute, US tariffs are expected to reduce Germany’s GDP by 60 basis points (bp) in 2026. However, the German government has initiated a clear change of course in terms of fiscal policy. Although the special funds for infrastructure and defense will only take full effect in the real economy after a certain time lag, the ifo Institute forecasts that, in combination with various relief measures for companies and consumers, initial effects on demand will already be visible in 2026. GDP is expected to rise by 30 bp as a result, and by as much as 70 bp in 2027.

Environment for important customer industries of NORMA Group

Mechanical engineering

The medium- and long-term prospects for the mechanical and plant engineering sector remain attractive. Investments in the emerging markets are being driven by dynamic population and economic growth, and the importance of the Global South for the global economy is likely to increase further. In industrialized countries, investment requirements are primarily defined by three structural drivers, irrespective of the economic cycle: protectionism, decarbonization, and digitalization. The intensification of trade conflicts in combination with the upheaval of the geopolitical order therefore requires the establishment of new production sites and entire value

creation structures in individual countries or regions. A high level of dependence on global supply chains could prove detrimental in the future. This requires high strategic investments as well as the ongoing transformation of the world toward zero emissions. Significant investment in new production processes and technologies is needed to advance climate protection in the industrial sector. Finally, the boom in artificial intelligence is accelerating the digitalization process and triggering corresponding investments in modern machines and smart technologies.

These fundamental drivers are already increasingly shaping investment activity. Against this backdrop, the climate for mechanical and plant engineering is likely to improve as early as 2026, even if economic momentum remains low and the geopolitical risk high. A more favorable financing environment generally has a supportive effect. The industry association VDMA is forecasting real growth of 2% in global machine sales for 2026. High growth is expected for China (+4%) and India (+5%), although momentum is slowing somewhat in both markets. In South Korea (+2%) and Japan (+1%), the markets are developing moderately, while stagnation is emerging in Taiwan. Sales are also expected to fall in Brazil (-4%) and Turkey (-2%). Despite the political prioritization of domestic investment, the USA only achieved growth of 1%. The trend in Canada and Mexico (-1% each) remains negative. A sideways trend is predominantly emerging for Europe. While the sector is shrinking slightly in Switzerland (-1%), real sales in the UK and the eurozone will stagnate. Declines in France (-2%) and the Netherlands (-4%) were offset by growth in Belgium and parts of Eastern Europe and Scandinavia. Zero growth is expected in Italy and Spain in 2026. For Germany, however, the VDMA expects a trend reversal. The industry could increase its production by 1% in real terms in 2026.

Automotive industry

Protectionism, which has been exacerbated significantly by US tariff policy, will continue to represent a substantial burden for the global automotive market in 2026, especially as the risk of further escalation remains high. The industry experts at S&P Global Mobility (S&P GM) also see risks for the availability of microchips and battery raw materials. Supply bottlenecks in 2026 can therefore not be ruled out. In addition, the easing of regulations on the phase-out of combustion engines is having an impact on customer demand and manufacturers’ production planning, while the greater competitiveness of Chinese manufacturers – particularly in the case of electric vehicles – is further shifting the global market balance. For 2026, S&P GM expects global sales of 91.8 million light vehicles (up to 6 tons), which corresponds to broad stagnation (+0.1%). Declines in China and the USA were offset by a slight upturn in sales in Europe. In an environment without any pronounced momentum, but at the same time with high risks and burdens, the automotive industry is unlikely to expand its production overall. Accordingly, S&P GM is forecasting global vehicle production of just 92.6 million LVs (-0.4%) for 2026. The regional focus is shifting. Automotive production in South America and southern Asia is set to grow strongly – India alone is expected to increase output by 7.8%. By contrast, declines in production are expected for North America (-2.2%), Japan/South Korea (-1.3%), China (-1.4%), and Western Europe (-1.6%). The industry association VDA expects production in Germany to fall by 1% to

4.11 million cars in 2026 due to a slight decline in exports. The outlook for the global commercial vehicle market (commercial vehicles, trucks, and buses) also remains subdued for the time being. S&P GM expects production to stagnate at 3.4 million commercial vehicles in 2026, but sees the possibility of a more significant upturn in 2027.

Irrespective of the short-term burdens on the automotive industry, the structural trend remains unbroken. Electromobility in the form of new energy vehicles (NEVs) continues to gain ground. On the way to a zero-emission automotive sector, battery electric vehicles (BEVs) and plug-in hybrids (PHEVs) have established themselves on the market and are gaining market share at the expense of combustion engines powered purely by gasoline and diesel. China in particular is driving the technological revolution on the global market with a large number of manufacturers and new models in the lower price segment. In contrast, the USA and most recently the EU have softened their targets for phasing out combustion engines. In the short term, the enormous demand for microchips associated with the AI boom could also lead to new supply bottlenecks in the automotive industry. The availability of rare earths also remains geopolitically uncertain. Nevertheless, S&P GM’s forecast for the period from 2026 to 2030 also points to continued strong growth in the NEV segment. However, the expected rate of market penetration has been reduced compared to last year’s forecast. Specifically, global production of BEVs is now expected to grow by almost 20% and PHEVs by 11% in 2026. The combined global NEV market share is therefore set to rise to 26.7% (2025: 22.7%). By 2030, the share is expected to increase to 38.7% (previous forecast: 45.8%). This new scenario underscores two key points: The NEV segment is growing strongly, but classic combustion engines will remain very important in the global market for the foreseeable future.

Construction industry

In many regions, the construction industry is a key pillar of the economy. In the emerging markets in particular, the industry provides important impetus for growth. In Asia, the construction industry is being driven by dynamic population growth, ongoing urbanization, and extensive public investment in infrastructure. As a result of climate change, projects to mitigate consequential damage are becoming increasingly important. Indonesia, for example, is investing in the construction of a new capital city as part of a generational project, as Jakarta and the island of Java are at risk from rising sea levels. The construction industry is also a key economic factor in the Philippines. According to market forecasts, the construction sector is set to grow by an average of 5% per year until 2033. Among other things, the government is planning to expand industrial zones, with an increased focus on data centers in the future. Largely independent of the cycle, India’s construction industry is also growing extremely dynamically, most recently at annual rates of 6 to 7%. In contrast, the construction sector in China is likely to remain in a downturn in 2026. Early indicators are not yet pointing toward a turnaround in building construction. The real estate crisis continues to put the brakes on private consumption and construction investment. New construction starts for residential and commercial buildings have recently continued to plummet, meaning that the volume of completed buildings in 2026 is also likely to be low.

Overall, the construction industry in the USA should benefit from the interest rate cuts over the course of 2026, with private residential construction in particular typically being sensitive to interest rates. According to the latest analyses by FMI, a construction research institute specializing in North America, the estimates for 2026 vary greatly depending on the segment, and the economic tailwind remains subdued. For 2026, analysts are forecasting only a slight nominal increase in US construction spending (+1%). Construction activity in the area of apartment buildings (-2%), as well as commercial (-4%) and industrial buildings (-3%), is likely to decline again. In contrast, a slight recovery is expected for single-family homes (+1%). In addition, the construction of office buildings should recover strongly (+7%) and the boom in data centers should continue (+23%). The outlook for civil engineering also remains favorable (+4%), as further growth is expected in the area of utility infrastructure. In Canada, the prospects for 2026 are very positive. The construction industry there is experiencing a broad-based and further accelerated upturn (+4%) with growth in all segments.

Europe’s construction industry is likely to return to growth in 2026 after several years of weakness. According to the Euroconstruct network, the improved financial environment, long-term infrastructure programs, and the high, pent-up need for renovation are having a positive effect. Civil engineering will continue to provide the main impetus, while a noticeable recovery in residential construction is not expected until 2027. On balance, real construction output in Europe is expected to increase by 2.4% in 2026. Regional growth is broad, but varies in strength. In Spain and Portugal, the upturn in the construction industry is continuing. There are also signs of a return to growth in Italy and France, and the UK’s construction sector is set to gain momentum, too. In Germany, construction output is expected to increase by 0.5% in real terms in 2026 and by 1.8% in 2027. Civil engineering will gradually benefit from the special funds for infrastructure and climate neutrality (SVIK). While construction investment by companies is likely to gradually pick up, residential construction will initially lag behind this trend. Only 215,000 residential units are expected to be completed in 2026, which is around 20,000 fewer than in 2025. However, the Deutsche Bundesbank expects that rising real wages and government measures – including the “construction turbo” and subsidies for the EH 55 home energy efficiency standard – will gradually provide additional impetus for residential construction as time goes on.

Legal and regulatory influencing factors

As part of the international orientation of its business and in line with its acquisition strategy, NORMA Group is obliged to comply with various legal and tax regulations. Product safety and product liability laws, construction, environmental, and employment law requirements, as well as foreign trade and patent law all play a role here. RISK AND OPPORTUNITY REPORT

NORMA Group’s product strategy is influenced by the growing density of regulation in environmental law in key industries. NORMA Group sees many opportunities to benefit not only from current global megatrends, but also from regulatory developments. This includes the area of climate change mitigation and decarbonization. Related to this are developments in the area of the energy transition and the application field of alternative energy generation and storage. Since 2024, the latter have been increasingly addressed by the Industry Applications strategic

business unit, among others. In addition to applying new, customer-specific approaches, the division also draws on years of engineering development experience from Mobility & New Energy’s direct OEM business. In terms of synergies, the Group is focusing in particular on identifying adapted product applications for relevant market segments based on products already established on the market, as well as starting points for direct business.

In addition, the structural change in the automotive industry, driven by the growing focus on lower-emission drive technologies, continues to be an important driver for NORMA Group’s sales – and especially for the Mobility & New Energy business unit. NORMA Group’s business is benefiting from new emission regulations and fleet regulations, as well as the strong trend toward alternative drive models. The increasing electrification of the automotive industry in particular is presenting original equipment manufacturers (OEMs) with new challenges. This opens up new opportunities and business segments for NORMA Group, particularly in the field of thermal management RESEARCH AND DEVELOPMENT. The increasing complexity of systems in vehicles – due to downsizing or hybrid vehicles, for example – also increases the number of interfaces and thus the demand for reliable joining technology.