German Economy Faces Grim Outlook Amidst Rising Challenges

German business associations report a grimmer economic outlook compared to the previous year, with concerns over high costs and excessive bureaucracy. A survey indicates worsening conditions and anticipated job cuts in various sectors, threatening employment in industries including iron, steel, and mechanical engineering.

German business associations have expressed a more pessimistic outlook regarding the economy than they did a year ago. A recent survey published by the employer-oriented German Economic Institute (IW) shows 31 out of 49 associations find the current situation sliding further than in 2023.

The IW survey indicates significant industry concern, with 20 of 49 industry representatives predicting a downturn in production and only 16 expecting growth next year. Rising energy, labor, and material costs, alongside excessive bureaucracy, are significant burdens for companies, affecting their global competitiveness.

The global uncertainty paired with domestic political issues hampers exports and investments, warned the IW. This negative sentiment may severely impact the labor market, as half of the surveyed associations foresee job reductions in their industries. Particularly hit sectors include iron, steel, mechanical engineering, and construction.

(With inputs from agencies.)