# Around 40% of German companies expect output decline in 2023 – IW institute
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-09
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: German companies foresee contraction in 2023, blames high
Meta Description: 40% of German companies anticipate business decline in 2023 due to high energy costs, supply chain issues, and Ukraine war, according to the German Economic
URL: https://financedigest.com/around-40-of-german-companies-expect-output-decline-in-2023-iw-institutehtml

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BERLIN (Reuters) – Four out of ten German companies expect business to shrink in 2023, a survey by the German Economic Institute (IW) showed on Monday, blaming high energy costs, supply chain issues and the continuing war in Ukraine.

“The risk of a gas shortage in the 2022/23 winter season is no longer as present as it was in the summer of 2022, and energy prices have also retreated since then. However, they remain at a high level and production disruptions cannot be ruled out,” the IW said in the survey seen by Reuters.

Moreover, it will only become [clear in the course of 2023 how extensive gas and energy supply can be built up for the next](https://www.financedigest.com/whats-coming-next-in-the-clearing-and-settlement-world.html "What’s coming next in the clearing and settlement world?") winter and the extent of any possible disruptions that could occur in 2023.

The survey of around 2,500 companies showed that around a third of companies [expect output to stagnate and the remaining quarter predict business](https://www.financedigest.com/german-businesses-expect-only-mild-recession-as-disruptions-ease.html "German businesses expect only mild recession as disruptions ease") will grow.

Germany’s economy, Europe’s largest, is forecast to shrink by 0.3% next year, the most among G7 nations, according to the International Monetary Fund, hit by a sudden [halt of gas flows from Russia](https://www.financedigest.com/kfc-franchisees-in-russia-ask-govt-to-halt-sale-of-stores-to-local-operator-ria.html "KFC franchisees in Russia ask govt to halt sale of stores to local operator – RIA"), its former main supplier.

The outlook is particularly bleak in the German construction sector, where more than half of companies surveyed by IW expect a [decline in production](https://www.financedigest.com/roche-flags-2023-earnings-decline-on-slump-in-covid-products.html "Roche flags 2023 earnings decline on slump in COVID products") and just 15% anticipate more business.

The picture is barely brighter in industry, where 39% of surveyed companies forecast a decline, driven by a cautious [assessment in the consumer and basic industries](https://www.financedigest.com/automotive-mats-market-industry-analysis-opportunity-assessment-and-forecast-up-to-2031.html "Automotive Mats Market: Industry Analysis, Opportunity Assessment and Forecast up to 2031").

(Reporting by Klaus Lauer; Writing by Christoph Steitz; Editing by Christina Fincher)


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