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Tuesday, December 3, 2024

Medium-sized companies complain about a drop in sales

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production hall

Numerous medium-sized companies want to reduce their investments.

(Photo: dpa)

Berlin The mood in the economy deteriorated significantly over the course of the year. This is shown by the current economic survey by the ZGV association of medium-sized companies, which is available to the Handelsblatt. Accordingly, 16 percent of the companies surveyed rate their situation in the second quarter as poor. In the first quarter it was around nine percent.

The proportion of companies that say they are doing well economically has fallen from more than 45 percent to a good 36 percent. The remaining companies consider their situation to be stable.

“The economic prospects are subdued in many sectors,” said Ludwig Veltmann, general manager of the association of medium-sized companies. He takes the results as an opportunity to make a demand to the federal government: “Right now we need a reliable policy that doesn’t come around the corner almost every week with new requirements and bureaucracy packages.”

According to the survey, the difficult economic situation is also reflected in sales. Almost half of the companies surveyed (49 percent) reported a drop in sales.

That is 20 percentage points more than in the previous quarter. And there is hardly any improvement in sight: a good 43 percent of those surveyed assume that sales will continue to fall over the course of the year.

Economists view the economy in a similar way to SMEs

55 so-called association groups with around 42,000 affiliated companies from 17 sectors took part in the economic survey. Companies join together in groups such as Edeka, Expert or Sport 2000 in order to cooperate in purchasing or marketing, for example.

>> Read here: Habeck’s difficult wooing for the favor of the middle class

The gloomy mood among companies in the survey is in line with the expectations of many economists. Just a few days ago, the International Monetary Fund (IMF) confirmed in an analysis of the German economy: The energy crisis and rising interest rates are likely to ensure that the development of gross domestic product in the current year will be “slightly negative”. The IMF expects gross domestic product to fall by 0.3 percent.

The Bundesbank has also submitted a new assessment. Accordingly, economic output could have increased slightly again in the second quarter. The Federal Statistical Office will present a more precise estimate at the end of the month. In the two previous quarters there was a minus in each case – economists then speak of a technical recession.

mechanical engineering

SMEs are more pessimistic about the future.

(Photo: dpa)

The Bundesbank also expects only a “hesitant” recovery in the further course of the year. According to the Institute for Macroeconomics and Business Cycle Research (IMK), which is close to the trade unions, the danger of a recession lasting into the summer has even increased significantly.

>> Read here: Economy criticizes the federal government’s focus on subsidies

In addition to the energy crisis, the more difficult financing conditions for companies are currently making themselves felt, for example in the construction industry. In addition, consumers held back on their consumption at the beginning of the year due to inflation.

The subdued business outlook could also slow corporate investment. According to a survey by the Mittelstandsverbund, 31 percent of the companies surveyed are planning to increase their investments. However, the proportion of companies that want to reduce their investments has also increased to 27 percent. In the first quarter it was just under nine percent.

>> Read here: Hardly any new investments: Germany is endangering its economic substance

Chancellor Olaf Scholz (SPD) recently declared that the transformation towards climate neutrality could lead to a new economic miracle in Germany.

Many economists take a much more skeptical view of this. The IMF is cautious about the medium-term growth prospects, as emphasized in the most recent analysis. Due to the aging of the population and the lack of progress in productivity as well as the shortage of skilled workers, average growth rates of less than one percent can be expected in the medium term.

More: Economic experts warn of a subsidy race with the USA

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