German companies are losing confidence in their economic future, according to a study conducted by the German Chamber of Commerce and Industry (DIHK).
Of the more than 24,000 companies surveyed, 52% expect their business to get worse in the next 12 months, while only 8% expect it to improve. Position Said.
“This is the worst number ever measured since the study began in 1985,” DIHK managing director Martin Wansleben said in a post. “Even in times of coronavirus and the financial market crisis, the percentage of optimists was above 10%.”
The survey found that 82% of businesses see energy and commodity prices as a business risk. Wansleben said the study had never measured a risk value this high.
German industry has been particularly affected by rising energy prices, he noted. As a result, energy-intensive intermediate goods makers are “reducing production,” he added.
More than 1 in 5 companies in the rubber and plastics industry and more than 1 in 4 companies in the chemical sector have had to cut production.
16% of companies in the automotive industry have also cut production, while 17% of automotive companies plan to relocate operations to other countries due to high energy prices in Germany.
“It is also important now for politicians to set a structural direction for dynamic economic development, because Germany as a place, beyond the deep crisis, still has great competition problems. In order for us to be successful in the world in the future, we must first and foremost act as better people, not know-it-alls.
shift production, economy
A study by Deutsche Bank estimates that German production will fall by 2.5% in 2022 and by 5% in 2023 due to rising energy costs. The study says that the current period could be the “starting point for an accelerated deindustrialization” in Germany.
Large German companies can move their operations elsewhere, but the situation is expected to be tougher for SMEs, the backbone of the country’s industry.
“For German SMEs … adapting to the new energy world will be a major challenge, with some failing,” said the study.
The S&P Global/BME German Manufacturing Purchasing Managers Index (PMI) fell to 45.1 in October from 47.8 the previous month. This is the lowest since his first wave of COVID-19 in early 2020.
The PMI survey found that the recession in Germany’s manufacturing sector accelerated early in the fourth quarter. A faster decline was registered in both production and new orders.
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Naveen Athrappully is a news reporter covering business and world events for The Epoch Times.