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The Cologne-based Institute of German Economics says that despite the cooling in gas prices caused by the conflict between Russia and Ukraine, companies expect production to be disrupted.
Things are hardly looking any better in German industry, where 39 percent of the companies surveyed are forecasting a decline, driven by a cautious assessment in the consumer and basic materials industries. (Reuters archive)
According to a survey by the German Economic Institute (IW), four out of ten German companies expect business to shrink in 2023 and blame high energy costs, problems in the supply chain and the ongoing conflict in Ukraine.
“The risk of a gas shortage in the 2022/23 winter season is no longer as present as it was in the summer of 2022, and energy prices have also fallen since then. However, they remain at a high level and production interruptions cannot be ruled out,” said the IW on Monday in the survey viewed by the Reuters news agency.
“In addition, it will only become apparent in the course of 2023 how extensively the gas and energy supply can be built up for the next winter and to what extent possible disruptions can occur in 2023,” adds the expert report of the German Economic Institute .
The survey of around 2,500 companies revealed that around a third of the companies expect production to stagnate and the remaining quarter expect business to grow.
Germany’s economy, the largest in Europe, is expected to contract by 0.3 percent next year, the strongest among the G7 countries hit by a sudden halt in gas flows from Russia, its former main supplier, since the beginning of the year, according to the International Monetary Fund Ukraine war.
The prospects in the German construction industry are particularly bleak, where more than half of the companies surveyed by the IW expect production to fall and only 15 percent expect business to increase.
Things are hardly looking any better in industry, where 39 percent of the companies surveyed are forecasting a decline, driven by a cautious assessment in the consumer and basic industries.
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Germany’s industrial orders collapse as foreign demand falls
Source: Reuters
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