As of: February 7, 2024, 6:04 a.m
By: Amy Walker
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The German economy is in crisis.
Plagued by fears of recession and aspirations for structural change, companies have to reposition themselves.
Berlin – The German economy is currently moving from one bad news to the next.
The most recent from Tuesday (February 6th): Orders in the industry are stagnating and are only staying afloat thanks to unexpected large orders.
The Ifo Institute also reported on Tuesday that the mood in retail has deteriorated again, demand is not increasing, and at the same time it is burdened by supply chain problems and a shortage of skilled workers.
The depressing situation is also reflected in a new report from the management consulting firm Boston Consulting Group (BCG).
According to its “Industry Crisis Radar”, which
WirtschaftsWoche
first reported on, the mood in this country is worse than it has been for years.
The analyzed data even shows that the economy is doing worse now than during the corona pandemic or at the beginning of the Ukraine war.
Three sectors in focus: automotive industry, chemical industry and real estate
According to BCG, things are particularly bad in three sectors: the automotive industry, the real estate industry and the chemical industry.
Increased costs are a significant factor for all three areas, as BCG expert Jochen Schönfelder describes it in
WiWo
.
“In addition, the chemical and automotive industries are suffering from weaker demand and we are seeing significant financing problems in the real estate sector.”
It is not surprising that these three sectors are doing particularly badly.
The automotive industry is going through a phase of change due to the switch to electromobility and growing competition from China.
German car manufacturers still cannot keep up with the cheap models from China.
But US competitor Tesla is also putting local companies under pressure.
In 2023, the Tesla Model Y was crowned the best-selling car worldwide, both in China and Europe.
While the auto industry has to withstand price pressure from China, the real estate industry is not gaining momentum due to increased interest rates.
At the beginning of 2024, the industry is on hold because interest rates are expected to fall again at some point during the year.
Until that happens, real estate purchases will not be made in order to benefit from better conditions later.
The market must therefore be prepared for a test of patience.
And even if the recovery then occurs, economists at the German Economic Institute (IW) in Cologne do not expect a sudden return to the level of 2021, as stated in the February housing barometer.
The chemical industry suffers enormously from energy costs
In the chemical industry, however, the problems are even more profound.
There it is primarily the energy costs that cause problems for companies.
Since the beginning of the energy crisis, these energy-intensive companies have been demanding relief from the federal government and a prospect of better conditions in the future.
The competition in the USA and China benefits from significantly lower energy prices - among other things because they do not have to import their energy.
In Germany, this independence is only now being built up through a renewable energy infrastructure.
It will take years, if not decades, for this to be reflected in energy prices in this country.
A plasma cutter cuts parts out of heavy plate in a steel shop.
© Silas Stein/dpa
In
WirtschaftsWoche
, BCG chemistry expert Marcus Morawietz adds that the chemical industry is suffering from the fact that its most important buyers are also in crisis: “The most important buyers for chemical products are the automotive industry and construction - and therefore sectors that are themselves under considerable pressure “.
In his view, the current crisis means “a structural, almost tectonic upheaval” for the chemical industry.
“There is a great danger that chemical companies will relocate or shut down their business in Germany.”
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Incendiary letter to the government: Transformation Commission called for
A few days ago, leading German companies pleaded – once again – for politicians to do everything they can to quickly advance the transformation of the economy.
The signatories include Deutsche Telekom, the energy company Eon, Ikea Deutschland, Miele, Otto and Puma, Thyssenkrupp and Wacker Chemie.
The appeal entitled “Transformation as a project of the century” states that the economic survival of Germany as a location also depends on “whether we achieve the goal of climate neutrality”.
It is therefore necessary for the democratic parties to join forces, “which must enable long-term transformation processes and investment decisions in the economy”.
The ClimateWirtschaft Foundation initiated the joint letter.
The companies called on the federal government to convene a transformation commission.
Their demands include competitive energy prices and further development of the debt brake as well as fully digitalized administration.
The economy also needs a transformation and energy consensus from all democratic parties, more state and private investments in climate neutrality and a socially acceptable ramp-up of green markets.
With material from AFP