China’s reopening and hopes for slower US rate hikes caused the dollar to fall.
A survey from the German Economic Institute (IW) on Monday showed that four out of ten German companies expect their business to shrink in 2023. They blamed high energy costs, problems with their supply chains, and the ongoing war in Ukraine.
“There is less of a chance of a gas shortage in the winter of 2022/23 than there was in the summer of 2022, and energy prices have also gone down since then.” “But they are still high, and production problems can’t be ruled out,” the IW said in a survey that Reuters looked at.
“Also, it won’t be clear until 2023 how much gas and energy can be stored for the next winter, and how bad any problems that could happen in 2023 could be until 2023.”
The survey of about 2,500 businesses showed that about a third of them expect production to stay the same, while the other quarter think business will grow.
The International Monetary Fund predicts that Germany’s economy, which is the biggest in Europe, will shrink by 0.3% next year, the most of any G7 country. This will be caused by the sudden stoppage of gas flows from Russia, which was Germany’s main supplier.
The outlook is especially bad for the German construction industry, where more than half of the companies surveyed by IW expect their production to go down and only 15% expect more business.
The picture isn’t much better in industry, where 39% of companies surveyed predict a drop. This is because companies in the consumer and basic industries are being cautious.