(Bloomberg) — Germany’s wholesale sector sentiment plunged at the start of the year, dampening hopes of a rapid rebound in Europe’s largest economy, according to Berlin-based lobby BGA.
Its bi-annual wholesale indicator declined by 8.2 to 69.4 points in the second half of 2023, pushing the gauge further below the threshold of 100 that separates positive and negative sentiment. The slump — one of the worst in the last 25 years — was driven by the construction sector.
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The outcome underscores the enduring woes in Europe’s largest economy triggered by the energy crisis and weak global demand. Data earlier this week showed industrial production declining for a sixth month and factory orders falling short of expectations. Nationwide train strikes and violent protests of angry farmers are also putting strain on the country.
“A rapid economic recovery isn’t in sight,” said Dirk Jandura, BGA’s president. “While others have already recovered, we in Germany are stuck in an economic dead end with structural brakes of our own making.”
Bureaucracy, lagging infrastructure and high corporate taxes threaten Germany’s international competitiveness, he said. The government’s “abrupt funding freeze” following November’s shock court ruling further weighs on companies.
The survey results reflect this political discontent. Some 61% of firms in the wholesale sector are calling for a fundamental change of course, with only 1% satisfied with the government.
Proposals for improvements include tax reductions, and abolishing the country’s strict supply chain law, which “is now an almost greater burden on companies than high energy prices,” said Jandura.
While the prospect of a return to rapid growth this year is bleak — the BGA expects another downturn in 2024 if there isn’t an intervention from Berlin — Jandura still mustered some optimism.
“Our companies are the ones who have taken on social and societal responsibility, who have brought the German economy through the crises of recent years so well,” he said. “And that will be the case this time too.”
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