In view of the global situation, the industry association BDI expects the economy to develop weaker – globally, in the EU and also in Germany. "The growth of the world economy will amount to a good 2.25 percent in the coming year - after three percent in the current year," writes the Federation of German Industries (BDI) in its "Global Growth Outlook 2023", which is available to WELT AM SONNTAG.
"That's an extremely bad value." It threatens the third-worst result for the world in the past 32 years. The transatlantic economic area in particular will go through a pronounced phase of weakness.
The BDI economists cite the strong price increases as the reason for the bleak prospects. "The global economy is currently being shaken by an inflationary shock," they write. The main reason for this is the sharp increase in the cost of food and energy. This is again due to Russia's invasion of Ukraine. The drivers for the strong price increases are different on both sides of the Atlantic. But the big central banks reacted. This in turn slows down the development of the economy.
The weakness of the most important export markets is becoming a problem, especially for Germany as an export country. The BDI experts are expecting an increase in exports of 2.5 percent for the Federal Republic for the current year. What initially sounds like strong growth is, however, a clear decline in export momentum. In 2021, the increase in inflation-adjusted, i.e. real, exports of goods and services was still 9.7 percent.
German industry representatives are more pessimistic than the federal government. Federal Economics Minister Robert Habeck (Greens) announced in the autumn forecast in mid-October that he was expecting economic output to increase by 1.4 percent this year. According to the BDI, gross domestic product in Germany is likely to increase by almost one percent this year.
The BDI forecasts are not only a bad omen for the economy, but also for consumers. The experts expect a continued high price increase for the coming year: "In our opinion, the producer price developments indicate that the inflation rate in the euro area will also be very high in the first half of 2023 and that the inflationary pressure will only gradually weaken until the end of 2024."
However, the current situation and the outlook for the coming year are relatively far apart, particularly in the EU and in the euro area. In 2022, the euro area should “still grow strongly with around three percent real growth, but hardly any growth next year,” writes the BDI in its paper. "In our opinion, the cost and inflation shock, the clouded demand prospects in North America and the continuing high level of uncertainty in relation to the Ukraine war will significantly weaken corporate investment activity."
In addition, the monetary policy measures taken by the European Central Bank, i.e. the increase in the key interest rate, would have a full impact on corporate financing at the end of 2023. According to the BDI forecasts, the EU and the euro zone should only narrowly avoid a recession with an increase of 0.25 percent for 2023.
In addition, according to the association, many companies still find it difficult to pass on the increased purchasing costs for energy, for example, in the form of higher product prices. Although these have already risen by a good 40 percent, “in many sectors, the contractual clauses and international competition do not allow the cost pressure to be passed on to product and end consumer prices. This adjustment process will take some time.
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