The German economy could be headed for economic disaster, the German Chamber of Industry and Commerce (DIHK) warned in a new report Wednesday.
According to DIHK's survey of 28,000 companies, German exports will shrink next year for the first time since the global financial crisis ten years ago.
Die DIHK-#Konjunkturumfrage zeigt: Deutlicher Einbruch bei den Geschäftserwartungen der Unternehmen. Betroffen ist nicht nur die exportorientierte Industrie, auch Handel und Dienstleister blicken sorgenvoll in die Zukunft. pic.twitter.com/u7UmOG51y9— DIHK (@DIHK_News) October 30, 2019
DIHK's economic outlook is more pessimistic than the Federal Government. It said Germany's annual export growth would decline to .30% in 2019 from 2.1% in 2018. And for 2020, exports are to shrink by .50%, which would then tip it into contraction.
The "green shoots" economic rebound narrative for Europe's largest manufacturing hub is likely dead in the water for next year.
"For our economy, with its strong industrial core, this is a huge challenge," DIHK President Eric Schweitzer said.
"Since the financial crisis of 2008/2009, DIHK has not received such pessimistic replies from the companies," Schweitzer said. He pointed out that Germany's average export growth rate was usually around 5.5%.
DIHK has cut its 2019 GDP forecast to .40% from .60% previously. It estimates GDP growth of .50% for 2020, but the number will likely be revised lower in the coming months.
Commenting on Germany's frightening export deterioration is Joerg Buck, the CEO & President of the German-Italian Chamber of Commerce, who said: "The DIHK Business Survey shows: Significant slump in business expectations. Not only the export-oriented industry is affected, but also trade and service providers are worried about the future."
Last week, the Deutsche Bundesbank said the German economy might have entered a technical recession in September.
Schweitzer called on the Federal Government to take immediate action on the "worrying" economic development. The federal government should "act urgently."
"Our country must take action" before the crisis arrives, he warned.
No matter how much the Bundesbank and ECB attempt to stimulate the Germany economy with countless rounds of monetary policy, the business cycle has overpowered monetary authorities. Germans must prepare for the worst in 2020, as the economy is expected to continue decelerating to crisis levels.