The German economy looks bleak for the next six months: The Ifo business climate, Germany’s most important economic barometer, fell from 98.5 to 90.8 points in March. The business expectations of the companies have plummeted even more than when the Corona crisis broke out two years ago. “A historic slump,” said Ifo President Clemens Fuest on Friday in Munich. “Companies in Germany are expecting hard times.”
Because of the war that has been raging in Ukraine for four weeks now, industrial, trading, construction companies and service providers are expecting their business to decline sharply in the coming months. The industrial companies not only rated their outlook as “extremely uncertain”, they also rated their current business situation worse than in the previous month: their overall index has “fallen more than ever before,” said Fuest.
Federal Minister of Economics Robert Habeck said that Germany will build terminals for liquefied natural gas (LNG) and wants to be independent of Russian gas in two years. The President of the Federation of German Industries (BDI), Siegfried Russwurm, warned that companies were getting into existential difficulties because of the explosion in energy prices: “Some energy-intensive companies are already being forced to reduce their production due to excessive gas and electricity costs.”
The retail companies surveyed by the Ifo Institute assessed their current situation as good, almost unchanged, but the index of business expectations “fell more sharply than ever before”. Consumer prices had already risen by 5.1 percent in February. With continued inflation, the purchasing power of consumers is shrinking. “Retailers fear that customers will buy less because they have to spend more on energy and maybe put more on the high edge,” said Wohlrabe. Almost all supermarkets surveyed planned price increases. The trade association HDE expects 13.5 percent growth in online trade this year, and only 1.2 percent in stationary trade – nominal, not adjusted for inflation.
The business climate in the service sector deteriorated because the logistics industry is looking to the coming months with great concern. The medium-sized companies are struggling to survive, the temporary tax rebate on diesel is only “a drop in the ocean”, complained the Federal Association of Road Haulage, Logistics and Waste Management on Friday. The transporters are also struggling with sluggish supply chains and the loss of Eastern European drivers.
On the other hand, the mood in hospitality and tourism is good, they benefited from the end of many corona restrictions: “You expect a good summer,” said Wohlrabe.
The Nuremberg Institute for Labor Market and Occupational Research (IAB) expects this year at least 350,000 fewer unemployed and 520,000 more employees subject to social security contributions. The IAB expects the highest increase in employment in public service providers, education, health and in trade, transport and hospitality, while a loss of 10,000 jobs will be in industry. (dpa)