German companies expect only a mild recession next year despite headwinds from the energy crisis, raw material shortages and a tepid global economy, a survey of major associations published by Reuters yesterday showed.
“The last quarter of 2022 and the start of 2023 are likely to be accompanied by a decline in economic activity,” Federation of German Industries president Siegfried Russwurm said. “However, we expect only a slight slump.”
There have been growing signs that the German economy could stave off the worst of an economic downturn triggered by a plunge in energy supply from Russia after the invasion of Ukraine.
Photo: Reuters
Inflation slowed slightly to 11.3 percent last month from a high of 11.6 percent in October as energy prices eased.
The German government has forecast the economy would grow by 1.4 percent this year and contract by 0.4 percent next year.
Russwurm said that growth would remain subdued until 2024 as weak demand around the world hits Germany’s export-dependent economy.
The Association of German Chambers of Industry and Commerce said that there were many indications that supply chain disruptions were gradually easing.
“Freight rates for container prices are approaching long-term normal values again, and the congestion outside international ports is slowly easing,” association president Peter Adrian said. “If the announced relaxations of China’s ‘zero COVID’ policy are implemented, it would also be a positive signal for global supply chains.”
However, the association said that soaring energy prices and easing consumer sentiment are still clouding the outlook for next year.
The ZDH association of craftsmen echoed that forecast, saying noticeably fewer orders were coming in for next year.
“The order backlog will still carry us until the beginning of spring, but there are many question marks for the time after that,” ZDH secretary-general Holger Schwannecke said.
The German Wholesale, Foreign Trade and Services Association said the situation was still robust in many sectors of the economy.
“But we are carrying over negative expectations from month to month, the depth and breadth of which have not yet been realized,” German Wholesale, Foreign Trade and Services Association president Dirk Jandura said.
Jandura said he was confident that companies would come onto a more encouraging path again during the course of the spring.
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