The Bavarian Chamber of Industry and Commerce (BIHK) expects a recession in Germany and an increase in the inflation rate to ten percent. Food could even become 15 to 20 percent more expensive. “It will have to go up massively,” said BIHK President Klaus Josef Lutz on Thursday in Munich.
According to the BIHK economic survey, many companies are “still largely satisfied” with their current business situation, but business expectations have collapsed, especially in industry and construction. “In view of price increases and delivery difficulties with raw materials and materials, companies often do not know when they can fulfill the orders and whether the business will still pay off in the end,” said BIHK General Manager Manfred Gößl. “The upswing has been canceled.” Producer prices have risen by around 30 percent.
75 percent of the companies named energy and raw material prices as the greatest risk for the next twelve months. “It is clear that it will become even more expensive,” said Gößl. The US Federal Reserve is putting the brakes on monetary policy, the dollar is getting stronger, and energy and raw materials are billed in dollars. The European Central Bank, on the other hand, continues to step on the gas in terms of monetary policy. “We have to expect an inflation rate of ten percent by the summer.” The BIHK economic index fell from 124 to 112 points compared to the beginning of the year and is thus just below its long-term average. The price shocks and delivery problems unsettled the companies massively, it said.
Only the tourism industry expects good numbers
Not only the construction trade and industry, but also trade and the service sector “are skeptical about the coming months. Only tourism is expecting a good summer season,” said Gößl. A third of all companies surveyed do not expect the situation to improve until next year, nine percent no longer expect this at all, and half no longer dare to make such an assessment. “With such a slump, we have to expect a recession in Bavaria and Germany in the second half of the year,” said Goessl.
Disruptive factors are also the rigid corona policy in China, Bavaria’s most important procurement market, and the critical economic situation in the USA, Bavaria’s most important export market. The shortage of skilled workers remains a major concern for 61 percent of all companies. The uncertainty is leading to a noticeable reluctance to invest. The employment plans, on the other hand, were only slightly corrected. “The job creation will continue, albeit with weaker momentum,” said the BIHK. By the end of April, he had surveyed 3,500 companies.
Lutz warned that security of supply and the competitiveness of the Bavarian economy must have absolute priority. The expansion of renewable energies must be drastically accelerated, but must under no circumstances trigger further increases in energy prices “if we want to keep Bavaria as an industrial location”. Politicians should help companies diversify their procurement markets through new free trade agreements with Latin America, India, Australia and New Zealand.