Ifo: Every 15th company in Germany fears for its existence
In the wake of the economic downturn and impending recession, around one in 15 companies in Germany fear for their survival. According to a survey by the Munich-based Ifo Institute, 6.8% currently see their economic existence threatened. In the previous survey in January 2023, the figure was 4.8%.
"The phase of economic weakness is also reflected in rising corporate insolvencies," said Klaus Wohlrabe, Head of Ifo Surveys. "However, there are currently no signs of a major wave." The professional association of insolvency administrators and trustees in Germany (VID) recently expressed a similar view.
In the main construction sector, the proportion of businesses threatened with insolvency rose from 5.1 to 8.9 percent, according to Ifo. This is the highest figure for the construction sector since the question was first asked in June 2020. "Residential construction is in a deep crisis. This is causing difficulties for many construction companies," explained Wohlrabe. Due to rising interest rates and persistently high construction costs, demand is currently weakening massively and investors are canceling projects.
Companies from the transportation and logistics sector (14 percent), recruitment agencies (13.9 percent) and the energy-intensive chemical industry (12.5 percent) in particular are reporting economic concerns. The retail sector also continues to be severely affected - 10.3% of companies here feel that their economic existence is under threat (January: 8.3%). "Many retailers are still feeling the effects of consumers' reluctance to spend," said Wohlrabe.
Weakening new business in particular is causing concern. A lack of demand or orders was cited by 35% of the companies at risk as the reason for a threat to their existence. A difficult economic environment was cited by 27%, inflation by 24% and the current political situation by 14%.
The German economy contracted slightly by 0.1% in the summer and experts assume that the economy is also likely to contract in the current quarter. The economy would then slide into a temporary - so-called technical - recession.
- Despite the rise in corporate insolvencies, Klaus Wohlrabe, Head of Ifo Surveys, mentioned that there are currently no signs of a major wave of corporate insolvencies in Germany.
- According to Ifo's survey, each 15th company in Germany fears for its existence, with the proportion of companies in the main construction sector reporting the highest figure at 8.9%.
- The German economy, as reported by the source, contracted slightly by 0.1% in the summer, leading some experts to assume that the economy is also likely to contract in the current quarter, potentially putting more companies in Germany at risk of insolvency.
Source: www.ntv.de
