Business associations pessimistic about 2024
The budget dispute, high interest rates and rising energy prices mean that various sectors are not expecting growth in the coming year. On the contrary: according to a study by the German Economic Institute, the majority expect a decline in production or business.
The majority of sectors in the German economy are pessimistic about the coming year. According to a survey of 47 German business associations conducted by the Institute of the German Economy (IW), which has close ties to employers, 30 of them describe the current situation as worse in a year-on-year comparison - and only nine expect productivity to increase next year. Energy-intensive companies have a particularly gloomy outlook for the new year.
"Rarely has the situation been as gloomy as it is now, and rarely has the forecast been so pessimistic," summarizes the authors of the study. According to the study, energy-intensive sectors in particular, such as foundries, the ceramics industry, the leather industry and plastics processing, are expecting a significant deterioration. The real estate, construction and building industries as well as banks and savings banks are also pessimistic in view of the high interest rates.
47 associations were surveyed in November and December. 30 of them rated their current situation even worse than a year ago, when "the mood in the German economy was not good due to the energy crisis", according to the IW. Six sectors assess their current situation as better, for example the tourism industry, while eleven see it as unchanged.
Companies lack confidence in framework conditions
Only nine of the 47 business associations expect a higher production level in the coming year, such as the pharmaceutical industry and the automotive industry, which point to better production conditions. However, not a single association expects production to be significantly higher. In contrast, 23 associations expect a decline in production or business, while 15 associations expect production to remain at the same level.
This picture also has consequences for employment: Only five associations report an increase in employment for 2024, 23 business associations expect a decline and 19 expect employment to remain stable. "The German economy is suffering across the board because it cannot plan," explained IW Director Michael Hüther. The "budget disaster" in the governing coalition shows how serious the situation is.
Speaking on Deutschlandfunk radio, Hüther said that there was a lack of confidence in the framework conditions. Against this backdrop, he called on the federal government to work together with the opposition. He rejected the idea of lifting the debt brake, but proposed a general government investment and transformation fund. This must be enshrined in the Basic Law. Otherwise, there was a risk of further deindustrialization and migration abroad.
Price increases burden micro-enterprises
The credit agency Schufa published its own survey of micro-enterprises and self-employed individuals, the majority of whom are also worried about the future. The biggest challenges cited by respondents were general price increases (79 percent of micro businesses and 65 percent of the self-employed) and bureaucracy (70 percent and 47 percent respectively).
In addition, 40 percent of micro-enterprises and 36 percent of solo self-employed stated that they had fewer orders than in the previous year. 60 percent of micro-enterprises and 53 percent of solo self-employed persons are therefore afraid of a drop in turnover or loss of income - also due to unpaid invoices from customers. In November, 509 solo self-employed and 302 micro-enterprises were surveyed.
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Based on the economic challenges facing various sectors and the pessimistic outlook of many businesses, the Institute of the German Economy Cologne issued a forecast suggesting that economic growth may not be seen in 2024. In fact, their survey revealed that 30 out of 47 business associations expect a decline in production or business, while only nine expect an increase. This economic policy concern is further emphasized by Michael Hüther, the Director of IW, who called on the German government to work together with the opposition and establish a general government investment and transformation fund, as the lack of confidence in the framework conditions is hindering economic growth.
Source: www.ntv.de
