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German firms have not been this pessimistic since 2008

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Tobias Jakob, an employee of German manufacturer of industrial robots and automation solutions KUKA, poses for pictures at the company's training center in Augsburg, Germany, March 28, 2019. REUTERS/Andreas Gebert

Germany’s Association of Chambers of Commerce and Industry (DIHK) has trimmed its growth forecast for 2020, after its autumn survey revealed that German firms have not been this gloomy and pessimistic about the future since the financial crisis of 2008-2009.

"In normal times, we actually have an average export growth of 5.5%," said DIHK president Eric Schweitzer in a statement. "For 2020, we expect exports to stagnate — actually a bit worse (-0.5%)."

He said that for an economy built on a strong industrial core, this represented a "huge challenge." Based on the results, the DIHK forecasts GDP growth of 0.4% in 2019—down from a previously predicted 0.6%—and GDP growth of 0.5% in 2020. It noted that the increase was mainly because 2020 has extra working days.

Growing protectionism, escalating trade conflicts and Brexit are putting a major dampener on expectations as regards international business. Almost every second export company now sees sluggish international demand as a major risk to their business growth.

The DIHK’s autumn survey revealed domestic demand is also weakening. "The cooling also leaves visible traces in industry-related service providers and wholesalers," said Schweitzer. "The worries about demand for companies are compounded by uncertainties due to economic policy at home, especially with regard to climate and energy policy."

Uncertainty and pessimism across industries is contributing to the ongoing decline in corporate investment and hiring plans. Employers in Germany continue to cite the chronic shortage of skilled workers as one of the biggest business risks .

One note of positive news in the DIHK’s report was from companies in the retail and tourism sectors, who are enjoying steady domestic consumption.