According to economists at leading business institutions in Germany, companies and consumers in Germany are facing difficult times. “In view of the many uncertainties – I think we have a hard winter ahead of us,” said “Wirtschaftswise” Veronika Grimm in a survey by the German Press Agency. Katharina Utermöhl from Allianz described the situation even more drastically: “We are firmly assuming a recession.”
And this will not be mild. The chief economist of the state-owned KfW Group, Fritzi Köhler-Geib, also sees dark clouds on the horizon: “The German economy is currently experiencing big problems.” Fundamentality surpasses the challenges of dealing with previous crises. This will also be reflected in company bankruptcies. “There will be some companies that just can’t make it anymore.”
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The main problem is the high prices, especially for energy. With inflation expectations of up to ten percent and galloping prices for gas and electricity, for example, consumers are forced to save. Expenditure on other purchases would have to be set aside. “The recent strong increase in the propensity to save shows how big the worry lines are among consumers. The looming loss of real purchasing power – caused primarily by high energy prices – is likely to be the sharpest headwind,” said Marc Schattenberg, economist and labor market expert at Deutsche Bank Research.
Christoph Siebecke from the Oldenburgische Landesbank sees the situation somewhat more favourably. He does not expect a severe recession in Germany. “What helps: the supply chains are no longer disrupted as badly as we have seen before. The price of crude oil is also a step away from what we had before,” he stressed. “The German economy is very competitive and adaptable. She did better than expected in the first half of the year. However, things will get more uncomfortable in the second half of the year,” he predicts.
Schattenberg, however, warns: “The high energy prices are putting both industry and the service sector under pressure. As a result, the burden on the economy should be all the greater.” Köhler-Geib called for a national strategy to secure skilled workers. Because: At many companies, the order books are currently still full. “Anyone who then has the necessary specialists can count themselves lucky,” she said.
Veronika Grimm also explained: “There is a massive need for skilled workers in many sectors. The question is whether one is willing to adjust wages. That would in turn drive up inflation.” This will rise anyway as a result of the price increases resulting from the discontinuation of the nine-euro ticket and the tank discount. Like Köhler-Geib and Utermöhl, Grimm also referred to additional risks from abroad. The still existing problems in supply chains or the drought in some regions of the world also weighed on the economy in Germany. “The global economy is also cooling off,” said Utermöhl.
