FRANKFURT (dpa-AFX) – Timid confidence, but no turnaround: After strong headwind in 2019, the prospects for the coming year have brightened somewhat in parts of German industry. This is the result of a survey by the Institute of German Business (IW) among 48 business associations. “It is a gentle glimmer of hope, but not the all-clear yet,” said Michael Hüther, director of the employer-oriented IW, the German Press Agency. “The uncertainty will remain high.” Hüther does not expect the economy to crash.
“Although the picture as a whole is poor, there is no sign of a severe economic downturn like in 2009 during the global economic and financial crisis,” said Hüther. Construction and private consumption remain robust, the labor market stable. For the coming year, the IW expects gross domestic product in Europe’s largest economy to grow by 0.9 percent, adjusted for the number of working days by 0.7 percent.
However, the challenges for German companies remain great: international trade conflicts, digitalization, Structural change and economic slowdown are unsettling and weighing on business. In the survey, 32 (previous year: 21) of 48 associations stated that the economic situation of the companies at the turn of the 2019/2020 year was worse than a year ago. According to the information, this affects particularly large and export-oriented sectors such as the automotive industry, mechanical engineering, the electrical and chemical industries.
For the coming year, the optimists will dominate over the pessimists. According to the survey, 19 associations expect the member companies’ business activity to be slightly higher than in 2019. However, a strong plus is not expected in any industry. 12 associations anticipate falling production, the rest assume unchanged business.
The optimists include the construction industry and the real estate industry, which are benefiting from the booming demand for housing. The craft, trade, insurance and sometimes also banks are also confident, according to the information.
Mechanical engineering and steel and metal processing, on the other hand, expect further declines in production. At least the decline in the automotive, electrical and chemical industries is unlikely to continue. The industry experts assume that production will be more or less constant compared to 2019.
The labor market is still defying the economic slowdown. Not that much should change in 2020 either. “Employment in Germany is likely to remain more or less stable in the overall assessment of the associations in the coming year,” analyzed the IW. In total, only 14 of the 48 associations expect the number of employees to decrease.
According to the information, banks and the insurance industry expect fewer employees on average than in 2019. Technical progress and intense competition currently did not allow any increase in personnel here. In mining as well as in energy and water management, the reduction in capacity is reflected in the energy transition. Among other things, restructuring was noticeable in large industrial sectors such as mechanical and automotive engineering.
The Council of Experts for the Assessment of Macroeconomic Development – The Economic Modes – also expects gross domestic product to grow by 0.9 percent in the coming year. The Ifo Institute and the Kiel Institute for the World Economy have been somewhat more optimistic recently. They assume an increase of 1.1 percent. In 2018, the German economy had grown by 1.5 percent ./mar/DP/he
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