OVERALL ROUNDUP: Ifo index falls for the fifth time in a row – DIHK is sounding the alarm
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MUNICH / BERLIN (dpa-AFX) – The mood in the German economy deteriorated again in November. The Ifo business climate, Germany’s most important economic barometer, fell compared to the previous month by 1.2 points to 96.5 points, as the Ifo Institute announced in Munich on Wednesday. It is the fifth decline in a row. Analysts had expected a somewhat more moderate decline on average. Economists interpreted the results as a sign of economic stagnation, in the worst case even contraction.
The German Chamber of Commerce and Industry is also sounding the alarm because of the aggravated Corona situation. DIHK President Peter Adrian told the German Press Agency: “Highs on the stock markets must not hide the fact that large parts of the German economy are already doing pretty badly again.” Many self-employed, small businesses and medium-sized companies are currently experiencing a breakdown rather than a departure for their own business.
“Delivery bottlenecks and the fourth corona wave are causing problems for companies,” commented Ifo President Clemens Fuest. The companies surveyed assessed both the current situation and the future prospects as less favorable than in the previous month. The business climate clouded over in all economic sectors considered.
In contrast to the strongly export-oriented German economy, French companies are more confident. The business climate brightened in November according to figures from Wednesday and is both above the level recorded before the Corona crisis and above its long-term average. The delivery problems and the high purchase prices apparently burdened the German economy more than the French, commented economist Ralf Umlauf from the Landesbank Hessen-Thüringen.
For some time now, German companies have been suffering from considerable bottlenecks in global trade in goods, which have led to sharp price increases for many raw materials and intermediate products. For the most part, the bottlenecks are a consequence of the corona pandemic. The burden is increased by the clouding corona situation with a sharp rise in new infections. Numerous federal states have already started to introduce stricter corona restrictions. That weighs on the growth prospects.
Bank economists expressed themselves accordingly skeptical. The economy continues to lose momentum, said Jens-Oliver Niklasch, economist from the Landesbank Baden-Württemberg. “At the moment, the corona situation, the supply chain issue and the rise in inflation are likely to weigh on the corporate sector.” Since there is no trend reversal in sight for the time being, the economic end to the year is likely to be unpleasant.
The signs are now pointing to a contraction of the German economy, warned Thomas Gitzel, chief economist at VP Bank, with a view to the final quarter of the current year. A short time ago stagnation was assumed, meanwhile a decline in the gross domestic product is likely. Also Jörg Krämer, chief economist at Commerzbank (Commerzbank share)
DIHK President Adrian said, “With the cancellation of Christmas markets, the cancellation of Christmas parties and overnight stays, entire industries are experiencing a scenario similar to last year”. Above all, it hits those who normally generate 30, 40 percent of their sales or more in these weeks. The fact that you are only allowed to offset the current losses for tax purposes with the Corona year 2020 is neither a consolation nor a help. “We need a stronger view of the practical problems and a reliable perspective,” he demanded.
Adrian rightly called it to extend the Corona aid again in view of the dramatic situation – the federal government wants to extend the bridging aid III Plus, which was previously limited to the end of the year, until the end of March 2022. “But everyone in business knows that this is not a sustainable economic model in the long term.” A clear compass of politics is now necessary for companies and employees. This applies both to dealing with the corona pandemic and to climate protection./bgf/eas/DP/bgf
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