BERLIN (Reuters) – The recovery of the German economy is not materializing and activity is expected to stagnate at best this year, the German Chambers of Commerce and Industry (DIHK) said on Thursday.
This forecast remains more optimistic than that formulated at the start of the year, when the DIHK expected a contraction of 0.5% in activity in 2024.
The DIHK expects private consumption to grow by 1.0% and support the economy this year, while inflation will decline to 2.3% from 5.9% in 2023.
The DIHK survey, carried out among 24,000 companies, shows on the other hand that neither exports nor domestic demand have supported the private sector for the moment.
“The current business situation is poor, even bad for the industry,” according to DIHK Managing Director Martin Wansleben. “Expectations are not strongly oriented upwards.”
Of the companies surveyed, 28% said the current situation was positive, while 23% said it was negative.
“It is particularly worrying that the situation in the industry has deteriorated since the beginning of the year and remains negative,” emphasizes Martin Wansleben.
Pessimism dominates in the industrial sector, where 23% of companies report a positive situation and 28% a negative one.
However, business expectations are improving. Only 26% of companies anticipate a deterioration in the current situation, compared to 35% in the previous survey.
The DIHK Sentiment Indicator is currently reading below average at 97.2. “It’s a little better than at the start of the year. But there are always more pessimists than optimists,” notes Martin Wansleben.
Export forecasts remain moderate. Among the companies surveyed, 26% expect exports to decline over the next twelve months, while 21% expect an increase, with the DIHK predicting stagnation in exports this year. In 2023, exports decreased by 2.2%.
Business investment appetite remains weak, with investments remaining below their pre-coronavirus levels, says Martin Wansleben.
According to the survey, 24% of companies say they expect an increase in investments, compared to 31% for a decrease.
Weak domestic demand is considered the main risk, mentioned by 55% of companies.
Next come high costs of energy and raw materials, as well as a shortage of skilled workers, according to the survey.
(Report by Maria Martinez, Corentin Chappron, edited by Blandine Hénault)
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