The German government lowered its expectations for German economic growth in 2021 earlier this year. Federal Economy Minister Peter Altmaier said that German GDP is expected to grow by 3% in 2021, which is much lower than the 4.4% growth expected for 2021 last fall. According to a new survey by the German Chamber of Commerce and Industry (DIHK), only 43 percent of companies are planning to invest abroad, the lowest in 10 years, due to the “Chinese Communist virus” (Wuhan New Crown Pneumonia, COVID-19) outbreak.
According to Deutsche Welle, 2020 will be a very unusual year for the world economy. Widespread embargo measures, hard-hit industries, record government subsidies and massive economic bailout plans have been the challenges for economic policy makers around the world over the past year. Germany as the European economy “leader”, also experienced an extremely difficult year.
Reports said the German economy fell by 5% in 2020, the most serious recession since the financial crisis. Analysis by Germany’s Federal Statistical Office shows that the epidemic has hit almost all sectors of the economy, with manufacturing and services being particularly hard hit. Data show that the manufacturing sector, which accounts for a quarter of Germany’s GDP, fell 9.7 percent last year, with processing companies down as much as 10.4 percent. As a result of a series of government blockade measures, the service sector was hit hard, with the trade, transport and catering sectors falling 6.3% from 2019, significantly higher than the overall macroeconomic decline.
Despite funding from the state for the new crown against the epidemic, the financial situation of German companies has not improved for several months. In a questionnaire survey conducted by the German Chamber of Commerce and Industry of more than 18,000 companies in all sectors, more than a quarter of the companies reported a decrease in their own reserves and a fifth of them said their solvency was a concern.
Experts point out that the huge new government support measures against the epidemic, although helpful to a large number of enterprises, in many cases cannot offset the sharp drop in turnover caused by the epidemic and the shutdown measures.
The epidemic continues to spread, and another surge in infections has forced many governments to extend the embargo period. According to a release from the Robert Koch Institute, a German disease control agency, 2,873,190 people have been infected and 76,895 have died from the new coronavirus since the outbreak began; from December last year to January this year, the number of patients sometimes exceeded 25,000 or even 30,000 on a single day. Germany is currently under quarantine measures, which the government previously extended until April 18.
A survey by the German Chamber of Commerce and Industry reported that the growth of numerous companies has been hampered not only by the new crown crisis, but also by tariffs and increasing protectionism.
A survey done on more than 2,000 manufacturing enterprises showed that, in addition to the textile industry, at present, the enthusiasm for overseas investment is not strong in machinery manufacturing. Nearly a quarter of enterprises even intend to reduce overseas investment.
Experts pointed out that if the cost considerations to foreign investment in enterprises increased, indicating that the domestic market cost pressure increased. Especially in textiles, vehicle manufacturing, metal products, electronics, and cutting-edge technology, this factor is playing an increasingly important role.
Altmeyer told reporters that the German economy is still picking up in 2021, “although not with too much vigor.”
According to data from a survey by the German Chamber of Commerce and Industry, total foreign investment by German manufacturing companies has been low since 2017, but has recently picked up in individual markets, mainly because the German pharmaceutical industry has seen a boom in business abroad since the new coronavirus pandemic, while German automakers are planning to increase investment abroad.
However, most of the world has not yet come out of the gloom of the epidemic, and the world economy is still facing high downside pressure and uncertainty. The latest news from Brazil said that the two production companies of German Mercedes-Benz in the states of São Paulo and Mato Grosso have been shut down since March 26 due to the worsening of the epidemic in Brazil’s New Crown. Mercedes-Benz said in a statement issued by the company, after discussions with local unions, the two sides agreed that in the current epidemic is the most serious critical moment, the shutdown can reduce the flow of people, but also to alleviate the current shortage of parts supply difficulties, while also responding to the local government hopes to use the long holiday to strengthen the social isolation requirements.
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