CashNews.co
By Maria Martinez
BERLIN (Reuters) -The German economy will contract by 0.2% this year, the German Chamber of Commerce and Industry (DIHK) said on Tuesday, cutting its previous forecast for a stagnation published in May.
The figures are not optimistic for 2025 either, when DIHK expects zero growth. That would be the third year in a row without real growth in GDP, according to the forecasts.
“We are not just dealing with a cyclical, but a stubborn structural crisis in Germany,” DIHK managing director Martin Wansleben said during the presentation of its economic survey for autumn 2024.
Business expectations for the coming months in the overall economy do not give reason for optimism either, according to the DIHK.
The survey, conducted among 25,000 companies from all sectors and regions, shows that 31% expect the business situation to worse, up from 26% in the last survey. Only 13% of the companies expect an improvement.
“We are greatly concerned about how much Germany is becoming an economic burden for Europe and can no longer fulfil its role as an economic workhorse,” Wansleben said.
Of the companies surveyed, 26% reported a good current situation, down from 28% in summer, while 25% reported a bad one, up from 23%.
The situation is worst in industry, with 35% of the companies rating their situation as bad.
“We last had such a situation 20 years ago during the severe crisis in 2002 and 2003. This is a clear alarm signal,” Wansleben said, calling for “profound reforms”.
The survey showed that a third of companies plan to reduce their investments in Germany. In the industry, it is even 40%.
“The signs of deindustrialization are consolidating. The poor investments show that the industrial value creation base is declining,” Wansleben said.
The three parties of the so-called “traffic light” coalition of the centre-left Social Democrats, the Greens and the FDP, which has ruled Europe’s largest economy since 2021, hold diverging views on how to spur growth.
Chancellor Olaf Scholz from the SPD and Economy Minister Robert Habeck from the Greens have already laid out their economic plans. Finance Minister Christian Lindner told Reuters on Friday that he is also working on his own proposals, which will be presented shortly.
“We need a government that is capable of acting ,” Wansleben said.
Beyond geopolitical problems, companies are worried about the location conditions in Germany. The survey showed that 57% of the companies see uncertain economic policy framework conditions as a risk, followed by labour costs with 54% of the companies and shortage of skilled workers with 57% of the companies surveyed.
(Reporting by Maria Martinez;Editing by Alison Williams and Angus MacSwan)