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Germany in economic collapse, analysts predict a more gloomy situation

2024-02-14 12:19:11Biznes SHKRUAR NGA REDAKSIA VOX

Germany in economic collapse, analysts predict a more gloomy situation

The economy in Germany has never been darker. This is a confirmation that comes from the economic institute in the country IFO. The current business climate index in January fell from minus 59 to minus 59.9 points. While it was warned that the forecast for the coming months is gloomy.

Construction workers are finding it difficult to find new jobs – more than half of the companies surveyed complained of a lack of contracts – but at least the number of cancellations of those already employed has thinned out somewhat.

However, this does not yet suggest a turnaround, which is still unlikely before adverse conditions change, including high construction costs and expensive financing. IFO currently estimates that only around 225,000 housing units will be completed in Germany this year.

Even the previous estimate of 270,000 apartments and houses was nowhere near the target of 400,000 a year, which was set by Chancellor Olaf Scholtz's coalition government after coming to power at the end of 2021.

Industrial production fell 1.6% in December on a monthly basis and 1.5% in 2023 overall compared to a year earlier. Exports, which are a key cornerstone of the German economy – fell 4.6% in December and 1.4%, or 1.562 trillion euros, for the whole year. Meanwhile, factory orders data looked promising at first glance as it showed an 8.9% increase in December compared to November. But this increase was thanks to some large-scale orders, which tend to be volatile.

While this "hard" data from December does not yet suggest that a recovery is on the horizon, the latest Purchasing Managers' Index report indicates that the bad situation in the manufacturing sector may end soon.


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