Among other things one of the fundamental issues with the Nazi economy was lack of access to raw materials. Western Europe had traditionally relied on colonialism and trade to supply it with resources like oil, rubber, coal, bauxite, etc. The blockade of Germany by the Royal Navy ended the possibility that they could acquire those by normal channels.

All of those resources are vital for manufacturing of munitions and thus the production of war material is inherently limited and often resources had to be dedicated to synthetically manufacture those raw material in the first place (i.e rubber, oil plants). It also meant it was infeasiable to diversify production geographically due to the lack of oil/coal to transport goods along distant parts of the supply chain and hence production tended to be focused in Germany itself. By comparison the USSR and the USA both controlled continental sized territories which had much greater resources and the latter had access to global markets.