The majority of German manufacturers reckon that the prospects of the national economy are rather gloomy due to the protracted Russia-Ukraine conflict.
The Federation of German Industries (BDI) has voiced concerns about bad times for the economy amid geopolitical headwinds and the energy crunch. The Federation is alarmed about negative consequences for investments and exports, as well as a sharp decline in the purchasing power of local consumers.
BDI president Siegfried Russwurm stresses that even the easing of coronavirus restrictions did not improve business confidence. For this reason, BDI does not expect an expansion in the economy in the near future. Manufacturers are certain that the repercussions of the Russian-Ukrainian conflict will ripple across the global economy, significantly hampering the GDP growth and the recovery of the eurozone economy.
Industries are likely to face difficulties due to anti-Russian sanctions and a slowdown in economic revival. Investment flows could also dwindle.
BDI struggles to predict the impact of the current critical situation on the purchasing power of the population. Undoubtedly, rising energy prices and galloping inflation will hurt it considerably. In 2022, a rise in household spending will be insignificant, BDI believes.
Therefore, Russwurm has called on the government to take measures to protect the national economy and enterprises. He also points out that many firms are now trying to stay afloat because of soaring energy prices.
Earlier, the Council of Economic Experts worsened Germany’s GDP outlook for 2022 against the background of the Russia-Ukraine conflict. Germany's GDP is expected to amount to only 1.8% this year.
