Germany’s Companies Downsize Investment Plans for 2024, Manufacturing Sector Hit the Hardest: ifo Institute Report

Companies in Germany have revised down their investment plans for this year.

die ifo investment prospects fell to -0.1 points in March, after +1.2 points in November. “Global demand for capital goods and intermediate goods remains weak and economic policy remains uncertain. So many companies are postponing their investment decisions,” said Lara Zarges, an economic expert at the ifo Institute.

die Companies in the manufacturing sector have it Investment projects most clearly contraction. Investment expectations fell there from 6.6 points in November to 1.4 points in March. “Especially in the energy-intensive sectors, the proportion of companies that want to reduce their investments is higher than the proportion that intends to expand,” says Zarges. The indicator fell from +3.7 points in the November to -3.1 points in March Expectations in chemistry have dropped significantly, from 16.4 points to 3.1 points.

In the non-energy sectors, more companies still want to increase their investments than reduce them. But, they have theirs too Investment prospect for the year 2024 of 11.2 points in November it fell to 4.7 points in March. Behind this is a strong correction among car manufacturers. They have lowered their investment expectations for 2024 from 34.0 points in November to just 1.3 points in March. “There is a glimmer of hope coming from mechanical engineers, among others,” says Zarges. Their investment expectations rose from -2.0 points in November to 7.5 points in March.

i do Handel the companies will wait for that 2024 is the worst. Even though their investment expectations have increased from -14.6 points to -13.3 points, on balance companies want to reduce their investments. The service providers have slightly increased their plans for this year. Investment expectations rose from +2.3 points to +2.5 points.

The points in ifo’s investment expectations show the percentage of companies that want to expand their investments on balance. The balance is obtained by subtracting from the percentage of companies that want to increase their investments the percentage of those that want to reduce their investments. If all the surveyed companies planned to expand their investments, the balance would be + 100 points. If everyone wanted to reduce their investments, it would be -100 points. Ifo Institute does not ask about the amount of investments planned. (Ifo Institute)