The BGA lobby group said sentiment in Europe's biggest economy was "on the floor," which is likely to have a negative impact on consumption. German wholesalers are now forecasting that their revenue will fall by 2% in nominal terms in 2024 after a 3.75% decline in 2023.
According to the report, the wholesaler sentiment index fell to 69.4 points in 2023 from 77.6 points in 2022, which was due to escalating geopolitical tensions and the challenges of digitalization and decarbonisation. Against the backdrop of the latest decline, the index reached one of the worst levels in the last 25 years and has returned to levels seen in the coronavirus pandemic.
"The results of our current survey of companies are alarming. While the economies of other countries have already recovered, Germany is stuck in an economic impasse. In addition, German government policies are placing a massive burden on companies," the BGA said, adding that about 90% of BGA members want big changes, including reducing bureaucracy and costs.
As for the outlook, the BGA expects economic stagnation, which is consistent with the estimates of the Bundesbank, which said in December that the economy would barely grow this year. Meanwhile, the government's current economic forecast still assumes an increase in GDP of 1.3% for 2024. But nearly all of the most respected economic researchers expect German GDP growth of well below 1% for 2024. The Ifo Institute now expects Germany to grow by 0.9% in 2024 instead of 1.4%, while RWI cut its forecast to 0.8% from 1.1% and DIW dropped its prediction to 0.6% from 1.2%.