Industrialists in Germany stated that they expect a “stagnation” in the German economy this year due to the decline in investments, high inflation beyond the exceeded level and the negative impact of the shortage of skilled workers on the economy.
In the statement made by the German Industry Federation (BDI) on German Industry Day, it was stated that the recovery in the German economy was delayed due to the high inflation and the shortage of skilled workers, which had a negative impact on growth.
BDI stated that it has seen an increase in equipment and innovation investments in Germany this year, but the decline in the construction sector with high interest rates negatively affected the economic forecasts.
While BDI estimates the growth forecast for the global economy as 2.7 percent, it is noteworthy that this is exactly 1 point below the average of the last 20 years.
“Germany is facing big challenges”
BDI President Siegfried Russwurm, in his assessment on the subject, stated that BDI expects the German economy to grow by approximately 0 percent this year, and said, “The global economy will grow by 2.7 percent. We have zero, Germany lags behind.” used the phrase.
Russwurm predicted that a noticeable recovery in the German economy would occur within the next year at best. However, Russwurm noted that the country’s economy is facing several challenges, such as an aging population, the fight against inflation, global political tensions, and higher costs for resilience in the economy, and high upfront investments in climate change and digital transformation.
Siegfried Russwurm said, “Many entrepreneurs are growing impatient and insecure. Germany is facing great challenges. “Politicians should consider structural reforms in a systematic way,” he said.
“There is a big challenge in energy transformation”
Noting that more and more German companies, including SMEs, are trying to get some of their value-added products out of Germany, Russwurm said that the German government sees great difficulties in transforming its energy supply.BDI President Russwurm stated that they expect the German Federal Government to come up with a concept that will ensure a secure electricity supply that can be implemented quickly and ensure international competition in the long run, and called for speeding up the planning and approval procedures in the country and better tax conditions for investments.
Referring to the relations between Germany and China, Russwurm drew attention to the complexity of the relations between the two countries and the process of German companies to strategically diversify their sales and supply markets and establish new partnerships. “Separating China would be unrealistic and harmful. Climate protection with China, as well as trade and investment We need a dialogue on their relationship,” he said.
The economy is in recession.
The German economy had technically entered recession, shrinking by 0.3 percent in the first quarter of this year due to the impact of unusually high inflation and rising interest rates on consumer spending.The economy contracted 0.5 percent in the last quarter of last year.
Although the bottlenecks that emerged during the Kovid-19 epidemic eased, the country’s economy is adversely affected by the stagnation in demand as a result of the rise in interest rates, the decrease in confidence in the economy and the decrease in the purchasing power of consumers in an unusually high inflation environment.
The German government expects 0.4 percent growth in the economy this year.
Leading German economic institutes predict the country’s economy to grow by 0.3 percent this year.