40% of German Companies Expect Falling Output amid High Energy Costs and Supply Chain Disruption

The German Economic Institute (IW) reported the results of its company survey, showing that four out of ten companies expect business will fall in 2023 as a result of high energy costs, supply chain issues and the endless war 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 retreated since then. However, they remain at a high level and production disruptions cannot be ruled out,” the IW said in the survey.

Nearly 2,500 companies from the survey showed that a third of companies expected the business to stagnate, but for all the remaining quarters expected business to grow.

The International Monetary Fund forecast that growth in Europe’s largest economy will shrink 0.3% in 2023, which would be the lowest among G7 nations, partly from the termination of gas supply from Russia.

The outlook for German construction also looks bleak and cloudy. Half of companies that IW surveyed expect lower production and only 15% predict business growth; also the industry sector is not going well. 39% of companies predicted a reduction.