Around 40% of German companies expect output decline in 2023

Four in ten German companies anticipate business shrinking in 2023, according to a survey conducted on Monday (9 January) by the German Economic Institute (IW). The poll was attributed to high energy costs, supply chain problems, and the ongoing war in Ukraine.

The risk of a gas shortage during the winter 2022/23 season is not as high as it was in summer 2022. Energy prices have also fallen since then. They remain high and production disruptions cannot rule out," IW stated in a survey.

"It will also be evident in the course 2023 just how much gas and energy supply can we build up for next winter, and how severe disruptions could occur in 2023."

A survey of approximately 2,500 companies revealed that around a third expects output to stagnate, while the remainder predicts business growth.

According to the International Monetary Fund (IMF), Germany's largest economy is expected to shrink by 0.3% next years. This is due to a sudden halt in gas flow from Russia, which was its former main supplier.

The outlook for the German construction industry is especially grim. More than half of those surveyed by IW anticipate a decline in production, and only 15% expect more business.

Industry is not faring any better. 39% of the surveyed companies expect a decline driven by a cautious assessment of the consumer and basic sectors.

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