40 percent of Germany’s companies fear contraction in the production sector this year due to various crises. 4 out of every 10 companies have indicated they are downsizing. This is what the German Economic Institute (IW) said in the results of the survey published recently. The production contraction has been blamed on rising fuel prices, disruptions in supply systems and the war in Ukraine. News Reuters.
According to IW, the gas crisis has decreased slightly in the winter season of this year compared to the summer season in the middle of 2022.
Meanwhile, the possible amount of supply of gas and fuel for the next winter will be clear in 2023. Potential crises can be identified. IW conducted this survey on 2500 German companies. One-third of the companies surveyed expect production to remain stagnant. In contrast, business growth is predicted by one-quarter.
Germany is the largest economy in Europe. However, the country’s economy is expected to shrink by 3.3 percent in the next year. According to the International Monetary Fund (IMF), this rate of contraction would be the highest among the G7 group of major economies. Russia was the country’s main gas supplier. All economic indicators have fallen due to the sudden supply freeze over the Ukraine issue. First among the affected sectors is the construction sector. Half of the companies included in the survey are going to reduce their production.