According to the Ifo Institute, the business climate index continued to fall in August. One of the reasons for this is the poor order situation, resulting from the low consumer sentiment. 08/26/2024 | 1:33 min
Christian Krömer runs toy shops all over Germany: North and South, East and West. The self-employed entrepreneur sees clear differences in sales and profits. “Business is better in the Munich area than in East Germany,” he states.
He can therefore hardly make a uniform statement on the 2024 financial year so far.
At the moment you have to be very satisfied if you don’t have a minus, but a plus.
Christian Krömer, self-employed entrepreneur
“We had hoped for an upturn”
What he can say is that he expected more from 2024. “We were hoping that there would be an upturn and that we would win people back.”
Many entrepreneurs feel the same way as Christian Krömer – especially in the retail sector. They are hoping for a turnaround. But this is simply not happening – on the contrary: the current ifo business climate index, something like a gauge for the mood among German companies, is pointing steeply downwards.
Companies complain about lack of orders
Professor Clemens Fuest from the Ifo Institute states in an interview with ZDF:
The German economy is sinking ever deeper into stagnation and a crisis-like situation.
Clemens Fuest, Ifo-Institut
His institute publishes the business climate index, which is studied just as closely in the executive suites as it is on the stock exchanges. The experts see a great deal of uncertainty among companies.
Klaus Wohlrabe, who compiles and evaluates the ifo surveys, already recognizes the consequences: “We are seeing a weakness in investment,” says Wohlrabe. Many companies are also complaining about a lack of orders.
The ongoing downturn in the German economy is posing challenges that threaten the existence of many companies. The number of bankruptcies in Germany has risen significantly. 19.08.2024 | 1:32 min
Holiday instead of shopping
It is not only industry that is struggling with the economic downturn. The German Retail Association is also not satisfied with the first half of 2024. In an interview with ZDF, Stefan Genth, the association’s managing director, also blames the geopolitical situation for this.
The war in Ukraine has also been driving up energy costs for a long time.
Stefan Genth, German Retail Association
That’s why many people are generally rather cautious. However, this does not apply to all areas of life. “Traveling, for example, was more important in the summer than shopping in the city center,” says Genth.
Incomes are rising, confidence is falling
The fact that consumers think very carefully about what they spend their money on does not necessarily have anything to do with the level of income. Clemens Fuest emphasizes that people actually have more money in their pockets at the moment. “Incomes are rising,” Fuest told ZDF. “And they are rising faster than inflation.” The problem is that few people expect it to stay that way.
Many people apparently expect that the company they work for will soon be doing worse.
Clemens Fuest, Ifo-Institut
Fewer guidelines, less bureaucracy
In such a climate, demands on politicians are not long in coming. Almost all experts want the federal government to provide new or more stimulus for growth in Germany.Economy in Saxony: More and more companies are positioning themselves against the AfD, according to the German Economic Institute. The state is demonstrating its cosmopolitanism because there is a lack of skilled workers from abroad.20.08.2024 | 2:49 min”Reducing bureaucracy is of course a top issue for our companies,” says Stefan Genth from the Retail Association. There is also a need for further relief in energy costs, both for companies and consumers. “This is where politics is needed,” says Genth.
Hoping for the Christmas business
Even though consumer sentiment has recently collapsed, retailers are not yet ready to give up on 2024. Stefan Genth predicts:
We believe the second half of the year will be better.
Stefan Genth, German Retail Association
Experience has shown that the autumn and Christmas season is always the impetus for many consumers to treat themselves to something. And toy retailer Christian Krömer adds: “Thank God we never skimp on children. That is our great fortune this year.”
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Source: ZDF
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