Economy only expects a mild recession

Economy only expects a mild recession

Construction site in Stuttgart

According to the umbrella organization, the trade is still well utilized until spring.

(Photo: imago images/Arnulf Hettrich)

Berlin Despite the problems caused by the energy crisis, a shortage of materials and the sluggish world economy, the German economy only expects a mild recession in the coming year. “The last quarter of 2022 and the start of 2023 are likely to be accompanied by declining economic activity,” said the President of the Federation of German Industries (BDI), Siegfried Russwurm, in a survey of large associations published by the Reuters news agency on Tuesday. “But we only expect a slight slump.”

However, growth will be rather restrained until 2024. “Because the entire world is in a phase of weakness,” said Russwurm, referring to the export-dependent German economy.

The German Chamber of Industry and Commerce (DIHK) hopes above all for an end to the disruptions in the supply chain, which still affect four out of ten companies. “Currently, there are many indications that the disruptions are gradually reducing: Freight rates for container prices are again approaching the long-term normal values, the traffic jams in front of international ports are slowly dissolving,” said DIHK President Peter Adrian.

“If the announced easing of China’s zero-Covid policy were to be implemented in this way, that would also be a positive signal for the global supply chains.” However, the DIHK does not expect an economic revival until the second half of 2023. “In any case, a recovery in economic output can be expected in mid-2023 at the earliest,” said Adrian.

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The business prospects of the companies are currently still very pessimistic. Despite the electricity and gas price brakes, the high energy prices remained a major burden. “In addition, there is record inflation, which is putting a significant damper on consumer spending,” said the DIHK President.

Craft reports fewer orders

The Central Association of German Crafts (ZDH) sees it very similarly. “High energy costs, further strained supply chains and falling real incomes of consumers are already being felt in craft businesses, as there are noticeably fewer new orders,” said ZDH General Secretary Holger Schwannecke. “The order backlog will last until the beginning of spring, but there are many question marks for the time after that.”

>> Read also: Economy calls for stable funding for energy-related refurbishments

The trade as a whole has come through the current crisis well so far. However, energy-intensive companies that were particularly hard hit would have to be relieved on the cost side and their existence secured so that they can survive the acute phase of the crisis.

According to the Federal Association of Wholesale, Foreign Trade and Services (BGA), the situation in many sectors of the economy is still robust. “But we are pushing negative expectations from month to month, which have not yet been realized in their depth and breadth,” said BGA President Dirk Jandura.

Modernization and simplification of the legal framework for investments and employment at the location are now necessary Germany. “Not only the economic, but also the political pressure to do this is increasing,” said Jandura. “In this respect, I am confident that we will be able to switch to a more positive path again in the course of the spring.”

More: The mood of the companies is at its lowest – but there are rays of hope

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