Cyprus Mail
Business International

German companies forecast business return to normal in 11 months

German Chancellor Angela Merkel holds a news conference

German companies expect it will be 11 months on average before their business situation returns to normal. This finding is based on responses to the latest ifo Business Survey, conducted in July.

The coronavirus is having a particularly lasting effect on service providers, according to the survey. “They do not expect to see a return to business as usual until after 11.7 months. In construction, it is expected to take 11.1 months; in trade, 10.3 months; and in manufacturing, 10.1 months,” the survey shows.

“The road to normalcy is still very long for many companies,” says ifo researcher and Head of Surveys Klaus Wohlrabe. “Even once all public restrictions are lifted, companies will still have to deal with their consequences.”

Arts and entertainment activities have been hit particularly hard by the coronavirus pandemic; a return to normal is expected here only after 17.5 months. The film industry and cinemas expect to wait 16.7 months; hotels 16.0 months; and travel agencies 14.6 months. In contrast, security services are expecting normal business to resume after only 3.8 months.

In industry, textile manufacturers are particularly pessimistic, expecting a return to normal in 14.5 months. In mechanical engineering, the wait is expected to be 12.0 months; for clothing manufacturers 11.1 months; for beverage producers 8.1 months; and in the chemical industry 8.0 months. Computer manufacturers are the most optimistic at 6.8 months.

In wholesale the expectation is 10.5 months, in retail 10.0 months.

German industry does expect to increase production over the coming three months. Sentiment improved in July for the third month in a row, as the ifo production indicator rose from plus 4.4 points in June to plus 14.7 points. “Industry is continuing to work its way out of its production ‘trough’,” says Wohlrabe.

The car industry plans to expand production only slightly: its index rose marginally to 51 points from 49 in June. Beverage producers are planning a more significant increase, and so the index there climbed to 31 points, up from 19 in June. The situation is similarly positive for pharmaceutical companies, with the index reaching 23 points, up from 12 in June. Expectations have also improved in the chemical industry and among food manufacturers: in both areas, the index rose to 19 points in July, from 9 in chemicals and 17 in food.

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