Businesses Remain in Negative Mood - Industry Predicts a Brighter Future - Frowning atmosphere persists in numerous businesses – Industry remains optimistic
Pessimistic Outlook for German Economy Persists, DIHK Reports
The German Chamber of Commerce and Industry (DIHK) has revealed a continuing pessimistic business sentiment for the German economy. In the latest survey, business expectations improved slightly from the beginning of the year, but remain overall "pessimistic."
Half of the companies surveyed rated the current situation as poor, while only a quarter considered it good. This negative assessment is the worst since the onset of the Corona pandemic, according to DIHK's CEO, Melnikov.
Various factors are contributing to the subdued mood among businesses. These include the weak domestic economy, dwindling foreign demand, and structural issues such as labor shortages, rising labor costs, and high energy and raw material costs.
Despite the challenges, the DIHK finds hope in the industry and construction sectors, which are showing signs of recovery. These sectors could potentially become driving forces of the economy once again.
However, the chamber emphasizes that clear signals from federal politics are necessary for this recovery to materialize. Melnikov called for quicker approval and planning procedures, lower energy costs, and reduced bureaucracy to stimulate growth and investment.
The DIHK also expressed concern over potential US tariff increases, stating that such measures could significantly harm the German economy. Exports, already in decline, are projected to decrease by 2.5% in 2023.
The DIHK expects the German economy to contract by 0.3% in 2023, marking a third consecutive year of decline. This contraction is influenced by the overall weakened economic conditions. Inflation, on the other hand, is projected to remain at 2.1% for the year, slightly lower than the previous year's estimate.
Economic policy uncertainty is identified as a significant business risk, with 59% of companies citing it as a major obstacle. High labor costs and weak domestic demand also pose challenges for businesses. The global economic slowdown, exacerbated by factors such as US trade policy and geopolitical tensions, further contributes to the pessimistic outlook among German businesses.
In conclusion, the German economy is facing a myriad of challenges, both domestically and internationally. Businesses are awaiting clear policy signals to improve investment and growth prospects.
- The DIHK emphasizes that clear signals from federal politics, such as quicker approval and planning procedures, lower energy costs, and reduced bureaucracy, are necessary to stimulate growth and investment, as tight labor markets, rising labor costs, and high energy and raw material costs are contributing to the subdued mood among businesses.
- The DIHK also highlights potential US tariff increases as a significant concern, stating that such measures could significantly harm the German economy, with exports, already in decline, projected to decrease by 2.5% in 2023.
