Companies in Germany have revised their investment plans for the current year downward. The ifo Institute investment expectations fell to -0.1 points in March, down from +1.2 points in November.
'Global demand for capital goods and intermediate goods remains weak and uncertainties persist regarding economic policy. As a result, many companies are postponing their investment decisions,' says Lara Zarges, economic expert at the ifo Institute.
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Manufacturing companies cut their investment plans the most. Investment expectations there fell from 6.6 points in November to 1.4 points in March. 'Especially in energy-intensive industries, the share of companies planning to reduce their investments is higher than the share planning to expand,' Zarges says. The indicator here fell from +3.7 points in November to -3.1 points in March. Expectations in the chemical industry took a major plunge from 16.4 points to 3.1 points.
In non-energy-intensive industries, there are still more companies planning to expand their investments than to reduce them. However, their investment expectations for 2024 also fell – from 11.2 points in November to 4.7 points in March. The reason is a strikingly strong correction among automakers, which slashed their investment expectations for 2024 from 34.0 points in November to just 1.3 points in March. 'Nonetheless, there is a small ray of hope from manufacturers of machinery and equipment,' Zarges says. Their investment expectations rose from -2.0 points in November to 7.5 points in March.
Trading companies remain the most pessimistic for 2024. Even though their investment expectations rose from -14.6 points to -13.3 points, these companies still intend to reduce their investments on balance. Service providers also increased their plans for the current year somewhat, with investment expectations edging upward from +2.3 points to +2.5 points.
More information:
ifo Institute
www.ifo.de
