German companies are expecting stagnation this year rather than a further deterioration, making them slightly less pessimistic than they were in the fall, according to the latest survey by the DIHK industry lobby.
(Bloomberg) — German companies are expecting stagnation this year rather than a further deterioration, making them slightly less pessimistic than they were in the fall, according to the latest survey by the DIHK industry lobby.
“The good news is that the German economy has been able to avert an impending crash,” DIHK Managing Director Martin Wansleben said Thursday at a news conference in Berlin. “Instead of a deep recession, we can expect more of a sideways movement.”
The survey of around 27,000 firms from all sectors and regions of Europe’s biggest economy showed that 16% expect an improvement in their business in the coming 12 months, up from 8% in the previous poll in November. Still, a gauge of expectations is still in negative territory at -14, well below the long-term average of +5.
The results are broadly in line with the German government’s latest forecasts, which project the economy will avoid a contraction this year and expand by 0.2%. Due to Russia’s full-scale invasion of Ukraine last year and a subsequent surge in energy prices, the country was on the brink of recession.
Almost three quarters of companies surveyed named prices for energy and raw materials as the biggest threat, followed by a persistent shortage of skilled workers.
Another problem facing German industry is the US Inflation Reduction Act, a package of climate measures and subsidies which is threatening to lure companies away from Europe.
Wansleben said the fact that the subsidies are designed to promote production within the US is a “huge problem” and reflects the Biden administration’s “America First” policies.
“As an exporting nation, we live from being able to supply to the world,” he added.
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