German Companies See Bleak Prospects For Rest Of 2020 After Covid-19 Outbreak

Germany’s main industrial sectors are no longer expecting any strong rebound this year and over half of the companies are likely to be impacted by the coronavirus, which has spread over 100 countries globally causing supply-chain disruptions and hurting lives.

Results of a survey by the think tank ifo revealed on Thursday that about 56 percent of German companies undergo negative effects from the spread of covid-19.

According to the survey conducted among 3,400 companies, travel agencies and tour operators were the worst hit. The hospitality industry was also badly affected.

Germany’s engineering industry association, VDMA on Thursday cut its production outlook for 2020. Output of the mechanical engineering is forecast to fall 5 percent this year.

Trade conflicts, global economic weakness and the structural changes in the auto industry have weighed on the mechanical engineering industry last year. The spread of coronavirus has made the situation even more difficult, the lobby noted.

Even assuming that the situation eases in the second half of the year and business improves, the industry will not be able to make up for the additional declines this year, VDMA President Carl Martin Welcker, said.

Elsewhere, Germany’s chemical industry association, VCI, also downgraded its production forecast for this year. The industry forecast the chemical output to decline 1.5 percent in 2020 and the industry turnover was forecast to remain at EUR 196 billion.

The VCI said the German industry is still in a recession and the demand for chemicals is subdued. The covid-19 has increased the economic risks, the agency said.

The effects of the corona epidemic will be felt by export-oriented German industry and thus also by chemical industry, the VCI added.

Source: Read Full Article