German economy expected to stagnate this year, DIHK says

GERMANY’S long-awaited economic recovery is not materialising and the eurozone’s largest economy will only stagnate this year, the German chambers of commerce and industry DIHK said on Thursday (May 23).

Nevertheless, the forecast was more optimistic than at the start of the year, when the DIHK expected a 0.5 per cent contraction.

The DIHK expects private consumption to support the economy this year, growing by 1 per cent, as inflation eases to 2.3 per cent from 5.9 per cent in 2023.

The DIHK survey, conducted among 24,000 companies from all sectors and regions, shows that the hope of recent months that good foreign business or a recovery in domestic demand could act as a driver for domestic companies has not materialised.

“The current situation of companies is poor, and even bad in industry,” said DIHK managing director Martin Wansleben at the presentation of the survey. “Expectations do not show a strong upward trend.”

Of the companies surveyed, 28 per cent reported a good current situation in the spring, while 23 per cent reported a bad one.

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However, business expectations are brightening. Only 26 per cent of companies now have negative expectations, down from 35 per cent in the previous survey.

The DIHK sentiment index currently shows a below-average value of 97.2. “That’s a little better than at the beginning of the year. But there are still more pessimists than optimists,” said Wansleben. REUTERS