German companies see risks from economic policy, energy prices -DIHK

BERLIN (Reuters) -German companies see numerous risks to business at the moment including economic policy, high energy and raw materials prices, a lack of skilled workers and weak domestic demand, the DIHK Chambers of Commerce and Industry said on Thursday.

A DIHK poll of more than 24,000 companies conducted between Sept. 11 and Oct. 6 showed that of those surveyed, 51% see current economic policy as a problem for their own development.

This shows that the government has to act quickly and in a practical way, said DIHK Managing Director Martin Wansleben at the presentation of the DIHK business survey.

"We don't have an economic situation at the moment where we say that if things go down, they will automatically go up again," Wansleben said. "The economy is so burdened by structural challenges that we have to do everything we can to ensure that the economy improves again."

The German economy has been struggling since the end of 2022. In addition to poor economic conditions there are structural and permanent challenges such as demographic changes, climate change and high energy prices.

According to the survey, only 13% of companies expect business to improve in the next 12 months, while 35% expect a deterioration.

"So far, we see no signs of a self-sustaining upswing," said Wansleben. "On the contrary, companies have revised downwards both their investment plans and their employment intentions."

The DIHK forecasts a 0.5% contraction in gross domestic product in 2023, and Wansleben said he expected the economy to stagnate next year.

The current business situation is assessed positively by more companies (30%) than negatively (21%). When looking into specific sectors, pessimism dominates in trade, with 27% of the companies with a negative view.

However, the business outlook for the coming 12 months is currently dominated by negative expectations in almost all sectors, with 35% of the companies assessing it negatively and only 13% positively, the survey showed.

"When it comes to companies' investment decisions, it is the long-term perspective that matters," Wansleben said. "There is a clear restraint in investment," he said.

Only 24% of industrial companies want to expand their investments in Germany, while 36% are planning to reduce them.

Overall, the risks and uncertainties faced by companies continue to increase. "Companies are now ticking off more than three (3.1) business risks on average, while before the pandemic, the average was 2.4," Wansleben said.

The survey showed that apart from the economic policy framework, companies are worried about energy and raw material prices (61%), the shortage of skilled workers (58%) and domestic demand (53%).

(Reporting by Maria Martinez, Editing by Rachel More; Editing by Hugh Lawson and Emelia Sithole-Matarise)