BERLIN, May 22 (Reuters) – The German economy is showing resilience in a difficult economic environment, but growth will remain subdued this year, the DIHK said on Monday, maintaining its forecast of flat GDP in 2023.
“There are still no signs of a broad upswing,” said Ilja Nothnagel, board member of the DIHK, at the presentation of the report in Berlin.
Despite high energy prices, rising interest rates and the war in Ukraine, companies are showing remarkable resilience. However, according to a DIHK survey of 21,000 German companies, the prospects for the next twelve months remain bleak.
As at the beginning of the year, 34% of the companies in the DIHK survey rated their situation as good, 51% rated their current business situation as satisfactory and 15% as bad. The resulting value of 19 points is slightly below the long-term average of 21 points, according to the DIHK.
“All in all, we have to say that the German economy is lacking momentum,” said Nothnagel. “Unfortunately, the global economy and domestic demand are currently not providing any impetus.”
He added that strengthening the domestic economy is necessary. “We urgently need new impetus for private investment, but also for infrastructure expansion,” said Nothnagel.
Companies continue to classify energy and raw material prices as the greatest business risk, albeit with a slight downward trend. Almost two-thirds of companies currently see this as a risk, compared to 72% at the beginning of the year.
The second factor that worries companies is labor costs, which are not only due to the shortage of skilled workers but also to rising inflation, according to the DIHK. Of the companies surveyed, 53% cited labor costs as a business risk, up from 49% in the previous survey.
Reporting by Maria Martinez. Editing by Alexandra Hudson
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