Companies in Germany see no evidence of a strong recovery for Europe’s largest economy, according to a survey by a business lobby group.
The responses of the 21,000 companies participating in the survey revealed a significant lack of economic momentum following two periods, both quarterly, that witnessed no growth (zero growth). Said the Association of German Chambers of Industry and Commerce « DIHK ».
Companies showed great resilience despite the continued increase in energy prices, the rise in interest rates and the war in Ukraine, but the expectations for the next twelve months are still ambiguous, especially as demand orders decline significantly. said Elia Nothnagel, CEO of DIHK Group.
The group continued to expect zero growth in 2023, which is strong pessimism compared to the European Commission’s expectations of 0.2% last Monday.
The report marks the beginning of a week of strong focus on the German economy, with the results of surveys including Germany’s Manufacturing Purchasing Managers Index (PMI) and the Evo Institute’s Business Confidence Index expected in the coming days, and economists expecting it to reveal a significant deterioration in the economy.
A second GDP estimate is set to show next Thursday whether exceptionally weak industrial output sent the country into recession in the first 3 months of this year. Most economists still believe the economy is in recession, not contraction.
The Bundesbank, the central bank of Germany, will also release its monthly report on Wednesday, which may reveal to investors its opinion regarding growth, while the bank’s president, Joachim Nagel, will deliver important speeches this week as well.
The DIHK survey showed that energy and raw material prices remain the biggest threats to companies, followed by the risk of a shortage of skilled labor. This, on top of inflation, means that more than half of respondents thought labor costs were a threat as well.
« Given the high proportion of elderly people in society, the lack of qualified workers will remain one of the main structural challenges for the future, » concluded Nothnagel.