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A shock survey has shown a stark lack of optimism among German industry leaders as they brace themselves for the long road to recovery after the coronavirus lockdown. Respondents predicted that many industries would not have bounced back to pre-pandemic levels until 2021. The survey was conducted in the first two weeks of June by the Institute of Germany Economy (IW).
The IW, a Cologne-based private research institute, said it “stands for a socially responsible free market economy”.
The majority of German companies are experiencing deep cuts in the wake of the pandemic.
Researchers interviewed 31 large German industry, service and construction associations to gauge the mood more than three months after the country went into lockdown.
The heads of associations gave their expectations for the current quarter, the second half of the year and 2021 in detail.
Summed up, the results showed leaders expect the crisis will not only be felt clearly in almost all industries in the second half of the year, but also in the coming year.
Five associations fear a particularly bad second quarter of 2020.
They saw production levels slashed to at least 50 percent below the previous year’s level.
The automotive industry and the hotel and restaurant industry were among those hit particularly hard.
Sectors that were already struggling with structural difficulties even before the outbreak in Germany are now in a less than desirable position, for example, the stationary retail industry.
Only the financial sector has a positive outlook for the coming months.
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It is helping millions of companies with loans, and help is likely to be in high demand in the near-future.
Despite the onset of recovery after the nationwide lockdown, 27 of the 31 associations surveyed expect a noticeable deterioration in the second half of 2020 compared to the previous year.
However, 20 of the 31 associations surveyed are cautiously optimistic about 2021 – at least compared to the current year.
It is worth noting that this does not mean they believe the situation will normalise.
Economic expert at IW Michael Grömling said: “If we assume that the low point was reached in the second quarter of 2020 and there will be no second wave of infections, the economy should slowly recover in the coming months.
“However, even in the coming year, we are still a long way from normalising business life.”
On Wednesday Germany will take over the presidency of the Council of the EU.
The six-month term will no doubt be fraught with challenges as Brussels and the UK continue to try to bash out a free trade deal before the December 31 Brexit transition deadline.
Additional reporting by Monika Pallenberg.
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