KfW survey signals recession – “Grave mood in consumer-related sectors”

KfW survey signals recession - "Grave mood in consumer-related sectors"

Metal processing company

The high energy prices weigh on medium-sized companies.

(Photo: dpa)

Berlin The mood among small and medium-sized companies in Germany has deteriorated massively. Ongoing bad news about the Ukraine war and the energy crisis caused the business climate in September to almost triple the usual monthly change, the KfW banking group said on Tuesday in its SME barometer with the Ifo Institute.

“Germany has swung onto a recessionary course,” said KfW chief economist Fritzi Köhler-Geib. Gross domestic product is likely to have shrunk in the summer, and at least two more negative quarterly rates are likely to follow.

“The grave mood, especially in the consumer-related sectors, and the depressing expectations everywhere underline the challenges Germany is facing in view of the exploding energy and living costs and the uncertain supply situation, especially with natural gas.”

Even if a recession is practically certain, it could be less severe than the depressive mood suggests. In addition to worries about energy costs and dwindling sales prospects, great fears are likely to play a role, especially when it comes to business expectations. The recently announced Defense shield of the traffic light coalition of 200 billion euros could take some of the cost pressure off companies and households. “The electricity and gas price brakes in particular are likely to provide a noticeable boost to consumption.”

Top jobs of the day

Find the best jobs now and
be notified by email.

The entire SME barometer fell by 7.8 points to minus 23.9 balance points and thus to the lowest level for 28 months. The assessments of the situation fell just into the minus range and business expectations fell to -44.1 balance points and, according to KfW, are thus getting closer to their record low from the early days of the corona pandemic.

>> Read here: Leading institutes expect recession for 2023 and rising inflation

The mood in retail and wholesale was the worst. “The concerns that the very high inflation rates will massively reduce purchasing power and that households will at the same time prefer to keep their money together out of caution are enormous in both retail sectors.” The climate in service providers and in construction is even milder. “For a long time a reliable driver of the economy, construction is now increasingly suffering from the price hikes in energy and materials as well as rising financing costs.”

More: What is a recession? Causes, examples and characteristics

Source link