Pandemic clouded company mood

Munich / Berlin (dpa) – The supply problems in industry and record high corona infection numbers are increasingly dampening the mood among German companies.

The most important economic barometer for Europe’s largest economy, the Ifo- Business climate fell in November for the fifth consecutive year and more than experts expected. The DIHK warned that many small tradespeople and medium-sized businesses experienced more demolition than a departure for their business. The federal government wants to extend the economic aid because of the situation.

The Ifo business climate index fell to 96, 5 of 97, 7 points in October. Companies are less satisfied with their current business situation. “There is also increasing pessimism in expectations. Delivery bottlenecks and the fourth corona wave are causing problems for companies, “said Ifo boss Clemens Fuest.

The business climate deteriorated in all the economic sectors examined, but especially in the service sector. The increasingly threatening pandemic situation plays an important role here. It was only on Wednesday that the Robert Koch Institute reported a daily record with 66. 884 corona cases. “The fourth wave of infections caused expectations to collapse, especially in the tourism sector and the hospitality industry,” said Fuest.

DIHK is sounding the alarm

Restaurants, hotels, travel companies and the event industry have suffered particularly in the previous waves. The German Chamber of Commerce and Industry now sounded the alarm. DIHK President Peter Adrian said that with the cancellation of Christmas markets and Christmas parties and the cancellation of overnight stays, entire industries were experiencing a scenario similar to 2020.

Above all, it hit them who usually achieved 30 to 40 percent of their sales or more in those weeks. “Highs on the stock markets shouldn’t hide the fact that large parts of the German economy are already doing pretty badly again.” easier access to short-time work. With the ordinance of the acting Federal Minister of Labor Hubertus Heil (SPD), the maximum duration of two years for a further three months up to 31. March extended. “For many companies it is not possible to foresee when they will be able to reach the pre-crisis level again,” said Heil. It is about easier access to equity grants. Due to the number of infections, several countries had canceled Christmas markets, including the Nuremberg Christkindlesmarkt and the Dresden Striezelmarkt, which normally attract millions of visitors.

It is already known that the bridging aid, which was previously limited to the end of the year, is an important crisis instrument until the end of March is extended. The restart aid for self-employed people is also to be extended.

Altmaier described the corona situation as exceptionally serious. “We have talked a lot about easing in the last few months, even though we should have talked about further measures to contain the pandemic.” The upswing will 2022 gain momentum. The point is to put on the «seat belt» for companies and employees for the winter.

Are the signs pointing to a shrinking economy?

The economic effects of the pandemic are likely will also be an important topic for the new federal government. Economists assume that the economy will at best stagnate and perhaps even shrink this quarter, after growth of 1.8 percent was achieved in the summer. Thomas Gitzel, chief economist at VP Bank, said with a view to the final quarter that a decline in gross domestic product was likely. Commerzbank chief economist Jörg Krämer was also pessimistic: “The German economy should at best stagnate in the winter half-year.” Economic output this summer was still below that of the fourth quarter 2019 – the last quarter before the pandemic. The Advisory Council of five economists advising the federal government had lowered its economic forecast for 2021 to 2.7 percent from 3.1 percent earlier in November. For 2022 the experts known as economic wise men expect growth of 4.6 percent. However, they warned of supply chain problems and pandemic risks two weeks ago.

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