Sunday, May 28, 2023

German economy sustains but lacks momentum

BERLIN (Reuters) – The German economy is showing resilience in a tough economic environment, but growth will slow this year, the DIHK Chamber of Commerce and Industry said on Monday, maintaining its forecast of stagnant GDP in 2023.

Presenting the report in Berlin, Ilja Nothnagel, a member of the DIHK’s board of directors, said that “signs of a general rebound are still lacking.”

Despite high energy prices, rising interest rates and the war in Ukraine, companies are showing remarkable resilience. However, according to a DIHK survey of 21,000 German companies, the outlook for the next twelve months remains bleak.

At the beginning of the year, 34% of the companies surveyed by DIHK rated their situation as good, 51% as satisfactory and 15% as poor. DIHK said the resulting score of 19 points is slightly below the long-term average of 21 points.

“Overall, we have to conclude that the German economy lacks momentum,” Nothnagel said. “Unfortunately, the world economy and domestic demand are failing to provide any momentum at the moment.”

He said that it is necessary to strengthen the national economy. “We urgently need a new impetus for private investment, but also for infrastructure development,” Nothnagel said.

Companies view energy and commodity prices as the biggest business risk, although this trend is reversing slightly. Currently, a little less than two-thirds of companies consider this a risk, compared to 72% at the beginning of the year.

Another factor that worries companies is the cost of labor, not only due to a shortage of skilled workers, but also rising inflation, according to DIHK. Of the companies surveyed, 53% cited labor costs as a business risk, up from 49% in the previous survey.

Nation World News Desk
Nation World News Desk
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