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BUSINESS

Germany third most attractive for business, says survey

A new survey has found that Germany is the world’s third favourite destination for international companies, behind China and the United States.

Germany third most attractive for business, says survey
Photo: DPA

This is the main finding of the annual Global Ambition Survey published Thursday by BDO, an international accounting firm with offices in more than 100 countries.

BDO asked chief financial officers in 13 countries where they see the “greatest opportunities for future growth,” and found that Germany ranks among the highest, despite its relative maturity as a market.

The survey found that in drawing up their expansion plans, corporate executives have to carefully balance increasing risks abroad and potential rewards – especially in volatile countries.

Because Germany’s economy is relatively stable and open, expansion isn’t as challenging as in places like Saudi Arabia, but it carries its own difficulties.

According to the report, the big problems that international companies’ have in Germany include difficulty finding effective managers, too much red tape and stiff local competition from other companies in an already mature market.

Meanwhile, German firms looking to expand abroad – often into huge emerging markets like China or Russia – have very similar difficulties, the report said, although massive currency fluctuations have become a bigger concern recently.

The importance of outward expansion for German firms has been made clear from the rising amount of revenue coming into German firms from outside the country.

The CFOs interviewed expected an average of 48 percent of their companies’ revenue to come from outside Germany in three years’ time, compared to the current 42 percent.

The survey was carried out between May and July and covered 50 companies in Germany and 751 firms altogether. It focused on the world’s largest mature and emerging markets, including China, the United States, Saudi Arabia and Australia.

Of the countries surveyed, executives saw the most opportunity in China and the least in Italy.

The Local/mdm

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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