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Central German economy: slack despite hopes of record figures!
The economic report for Leipzig shows weak optimism in the central German economy. Companies are struggling with rising costs and declining sales.
Central German economy: slack despite hopes of record figures!
The Central German economy remains in a worrying state. The current results of the joint economic report of the chambers from Leipzig and Halle/Dessau, published on June 16, state that there was no significant improvement compared to the previous year. According to reports from l-iz.de The business situation of companies has deteriorated further and the business prospects do not show any significant recovery. This survey covers over 147,000 companies in the region and highlights the serious challenges facing the economy.
The presentation of the results was led by Kristian Kirpal, Managing Director of the IHK Leipzig, and Thomas Keindorf, Managing Director of the HWK Halle. The economy in Central Germany is confronted not only with economic but also with structural challenges. The influence of high energy prices and persistent inflation is placing additional burdens on companies and households.
Economic situation and challenges
The entire German export industry is in a crisis that did not just begin with the corona pandemic. While Saxony and Saxony-Anhalt could possibly achieve new record figures for gross domestic product in 2024, the price-adjusted values are declining. A decline of 0.4 percent is forecast in Saxony and 0.9 percent in Saxony-Anhalt.
Stagnant sales, rising unemployment and a reluctance to invest characterize the current economic situation. The economic climate index for Central Germany is 32 points, which represents a dramatic decline compared to the high of 89 points in spring 2018. Companies are reporting decreased sales, rising operating costs and concerns about future labor costs.
Industries and future outlook
Insight into the specific sectors shows that companies that operate primarily domestically, such as crafts and services, have a better business situation than export-dependent industries. In the industrial sector in Central Germany, the cost increases for energy and labor were particularly noticeable, which significantly impaired the competitiveness of companies. Loud IHK Leipzig Domestic sales fell by 7.5 percent, while foreign sales rose by 12.4 percent to 17.6 billion euros, which increased the export quota to 37.9 percent.
The downward trend is also reflected in the reduced number of medium-sized companies, the number of which has fallen by 17 to 502. The number of employees fell by 0.5 percent to 98,748 people. Despite certain positive expectations, companies' business expectations have only improved slightly and remain at a negative level overall. The chambers are calling for vocational training to be strengthened and work incentives to be improved.
Another central issue is the state government's budget management. The draft budget for 2025 and 2026 envisages drastic cuts in the investment rate, which could further inflame the situation. Companies are calling for a sustainable reduction in energy costs and tax cuts to ease the burden on the economy.