By Andreas Kißler
BERLIN (Dow Jones)–According to a survey by the German Economic Institute (IW), a majority of business associations expect a decline in production or business in the coming year. “The results of the IW association survey from the turn of the year 2023/2024 provide poor prospects for the German economy in the new year,” explained the employer-related institute. The weak development of the global economy as a result of the geopolitical upheavals, the tightening of monetary policy due to high inflation and the uncertainty among companies and households due to the uncertainty about budget policy in Germany depressed the prospects for 2024.
According to the survey from November and December 2023, only nine of the 47 business associations expected higher production levels for the coming year. Not a single association is expecting significantly higher production for 2024. In contrast, 23 associations spoke of a decline in production or business and 15 of stable economic activity. “From the classification of the current picture of expectations in the history of the IW association surveys of the last three decades, a decline in overall economic performance can be derived in 2024,” explained the institute.
Given the overall decline in production and business expectations, it is no longer the associations with stable investment prospects that have the upper hand, but rather the pessimistic associations. The association survey signals a weak investment year in 2024. The development of the entrepreneurial capital stock will therefore not make any further progress in the new year – with long-term consequences for the production potential in Germany. In addition, “the stability on the German labor market that has been evident for a long time can no longer be seen with a view to 2024.”
Only five associations reported an increase in employment for 2024, while 23 business associations expected a decline and 19 expected stable employment. “The IW association survey shows that a trend reversal towards less employment and slightly increasing unemployment is underway in the German labor market as a result of the multiple crises and the uncertain economic conditions,” the Cologne institute concluded.
The current situation is rated worse than a year ago by 30 of the 47 participating associations. It must be taken into account that even a year ago there was no good mood in the German economy due to the energy crisis. Only in six sectors is the current situation rated better than last year; in the remaining eleven associations, the economic situation is said to be unchanged.
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(END) Dow Jones Newswires
December 26, 2023 6:00 p.m. ET (11:00 p.m. GMT)