The weakening global economy, increased interest rates and crises such as the war in Ukraine continue to put strain on German companies. As a survey by the employer-related German Economic Institute (IW) showed, 37 percent of companies expect their production to decline this year. 23 percent expect an increase. The results are available to the German Press Agency.
“The expectations for 2024 have deteriorated slightly again since the autumn survey of 2023,” the Cologne researchers found. Companies did not expect the economy to recover this year. According to IW, employment expectations improved slightly: 23 percent of the companies surveyed expect higher employment, while 35 percent expect a decline. Even if the balance increased by two percentage points, it remains clearly negative. The institute predicted that this finding makes it clear that the increase in employment that has been ongoing since 2005 will not continue.
There are regional differences in production expectations: the picture looks most positive in the southeast region, which consists of Saxony and Thuringia. There, the proportion of companies that expect higher and lower production is roughly equal. “This may reflect better business activity in the electrical engineering and information and communications sectors, which are relatively well represented in this region,” the IW researchers suggest. The outlier is the northeast region with Mecklenburg-Western Pomerania, Brandenburg, Saxony-Anhalt and Berlin: 48 percent of companies expect lower production this year, while 17 percent expect an increase.
Medium-sized businesses demand less regulation
There is also a gloomy situation in medium-sized businesses. The Mittelstandsverbund, which represents the so-called cooperating middle class, spoke of a hangover mood in the first three months of the year. The prospects are also poor: according to the association, 45 percent of companies expect sales to fall in the coming months, while a good 16 percent expect better business. According to the report, the participants in the survey were primarily in favor of reducing over-regulation (84 percent) as well as modernizing tax law and reducing the tax burden for companies (59 percent). According to the association, 56 group headquarters with around 42,000 affiliated companies from a total of 17 industries took part in the economic survey. These included the areas of kitchens and furniture, consumer electronics, shoes and textiles, the construction trade and food and beverages.