While energy worries and inflation are already having a noticeable impact on German companies, the worst could be yet to come: According to a survey, more than half of the companies are expecting an economic downturn in the coming year, and only eight percent are optimistic. This is the worst value ever measured.
German companies are firmly anticipating a recession and are preparing for another economic slump in the next twelve months. “Companies fear that the worst is yet to come,” said DIHK General Manager Martin Wansleben when presenting the nationwide IHK economic survey of more than 24,000 companies from all sectors and regions. According to this, more than half of the companies (52 percent) assume that their own business will deteriorate in the next twelve months. Only eight percent expect an improvement.
“This is the worst value that we have ever measured since the survey began in 1985,” emphasized Wansleben. “Even in the times of Corona and the financial market crisis, the proportion of optimists was more than ten percent.” That is why the Association of German Chambers of Industry and Commerce (DIHK) sees its very subdued economic forecast from spring confirmed: “This year we are expecting an increase of 1.2 percent in gross domestic product.”
Because economically, the first half of the year was still decent. In addition, many companies could have opened their shops again for the first time this year without lockdown restrictions. “The energy price crisis, inflation and the sluggish global economy have been eating up these growth impulses for months,” said Wansleben.
The German economy is not only facing a hard winter, but also a difficult year. “In 2023, based on the concrete reports and assessments from companies, we expect a decline in economic output of around three percent.” The DIHK expects around eight percent inflation this year and next.
The energy crisis is burdening the economy across almost all sectors. 82 percent of all companies – and thus more than ever – classify the energy and raw material prices as a business risk. Industry in particular is affected by higher energy prices and uncertainty in the energy supply. “The effects can be felt in concrete terms: the energy-intensive manufacturers of intermediate goods in particular are reducing their production,” said Wansleben.
In the chemical industry, more than one in four companies see themselves forced to cut back, in the rubber and plastics industry more than one in five. In the automotive industry, too, 16 percent of companies – and thus every sixth company – are reducing their production. About 17 percent of the automobile companies are planning to relocate production abroad because of the high energy prices.
Lobbyist Wansleben appealed to politicians to make Germany more attractive and competitive as a business location. “Everything must be done to ensure that companies regain confidence and invest in the future here.” The DIHK general manager also repeated the mantra of the economy that the government should not burden companies with additional bureaucracy in the crisis.
