BERLIN, Dec 27 (Reuters) – German companies expect only 10% of sales next year despite headwinds from the energy crisis, raw material shortages and a tepid global economy, a Reuters survey of major associations showed on Tuesday. There will be a mild recession.
“Economic activity is likely to decline in the last quarter of 2022 and early 2023,” said Siegfried Russwurm, president of the Confederation of German Industries (BDI). “However, we expect only a slight decline.”
Signs are growing that the German economy can avoid its worst recession triggered by a collapse in Russian energy supplies following the Ukrainian invasion.
Inflation eased slightly to 11.3% in November from a high of 11.6% in the previous month as energy prices eased. The German government forecasts that the economy will grow by 1.4% this year and contract by 0.4% next year.
Russwurm warned that growth would remain subdued until 2024 as weak global demand hit Germany’s export-dependent economy.
The Association of German Chambers of Industry and Commerce (DIHK) said there were many signs that supply chain disruptions were gradually easing.
“Freight rates for container prices are again approaching long-term normals, and congestion outside international ports is slowly easing,” said DIHK president Peter Adrian.
“If China’s announced relaxation of the zero-COVID policy is implemented, it will also be a positive signal for global supply chains,” he added.
However, DIHK warned that soaring energy prices and subdued consumer sentiment were still clouding the outlook for 2023.
Echoing DIHK, the ZDH Craftsman Association said that next year’s orders will be significantly reduced.
ZDH Secretary General Holger Schwannecke said: “The backlog of orders will still support us until early spring, but there are many question marks about the time after that.”
The German wholesale, foreign trade and services association (BGA) said conditions remained strong in many sectors of the economy. “But we are living with negative expectations every month, the depth and breadth of which have yet to materialize,” BGA president Dirk Jandura said.
He said he believes the company will be on a more encouraging path again in the spring. (Reporting by Rene Wagner; Writing by Maria Sheahan; Editing by Miranda Murray and Kirsten Donovan)