German investment expectations down

December 4, 2023

ifo: “Higher financing costs, weak demand and economic policy uncertainty”

Companies in Germany are cutting back sharply on investment as a result of the recession, a lack of orders and more difficult financing conditions. According to the ifo Institute (, investment expectations for 2023 fell to 2.2 points in November, down from 14.7 points in March.

Trade most pessimistic

Ifo economic expert Lara Zarges: “The investment climate has deteriorated noticeably. This is the result of higher financing costs, weak demand and economic policy uncertainty.” Companies are also cautious about 2024. With a balance of 1.2 points, expectations are even slightly lower than this year.

The trade sector is the most pessimistic. Investment expectations for 2023 fell from plus 3.7 points to minus 3.5 points, and for 2024 they have fallen further to minus 14.6 points. Service providers have also significantly reduced their plans for 2023. Investment expectations fell from plus 13.6 points to plus 1.0 points. In 2024, they plan to invest only slightly more than this year, with a balance of plus 2.3 points.

Industry most optimistic

In industry, on the other hand, there is optimism: the majority of companies intend to invest slightly more in 2023 and 2024. However, industrial companies have significantly reduced their plans for 2023. The balance fell from 21.4 points in March to 6.8 points in November; in other words, they still want to invest more, but not quite as much as originally planned.

Energy-intensive sectors in particular are planning to invest less. The balance fell from plus 9.1 points to minus 9.2 points. The correction is strongest in the chemical industry. Companies there have lowered their expectations since the spring from plus 13.9 points to minus 15.6 points. In the non-energy-intensive sectors, expectations for the current year fell from 22.3 points in March to 12.6 points in November.

Car manufacturers are even sticking to their original plans and intend to significantly increase their investment spending. The balance remained almost unchanged at plus 34.4 points. Investment expectations in industry for the coming year are largely stable at 6.6 points. There are signs of a slight improvement in the energy-intensive sectors. Investment expectations are at plus 3.7 points.

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