German economy to shrink by at least 10% - DIHKGerman economy to shrink by at least 10% - DIHK
FILE PHOTO: The spread of the coronavirus disease (COVID-19) in Frankfurt

BERLIN (Reuters) – Germany’s DIHK chambers of industry and commerce expect Europe’s largest economy to shrink at least 10% this year due to the coronavirus crisis, its president said on Tuesday, a much more pessimistic view than the government’s forecast.

“This year, and there is no way around it, we will witness a historic economic downturn,” DIHK President Eric Schweitzer said when presenting the association’s latest survey of industrial companies.

The DIHK’s expectation for an economic plunge in the double-digit percentage range compares with the government’s forecast for a record contraction of 6.3% in 2020.

“German businesses are facing their biggest challenge since the end of World War Two,” Schweitzer said, adding that many industrial companies were facing massive liquidity problems.

The DIHK survey, conducted among some 10,000 industrial companies between May 4-6, showed three-quarters reported declining demand and 80% expected a substantial drop in sales.

Nearly 50% of German industrial companies are putting investments on hold and are planning to cut their budgets because of the coronavirus pandemic, it said.

Due to the disruptions caused by the outbreak in many countries across the globe, almost a fifth of German industrial companies are currently reorganising their supply chains, the survey showed.

“World market shares are currently being redistributed,” Schweitzer said.

DIHK trade expert Volker Treier said he expected German exports to decline by 15% this year, due to weaker demand from major export markets such as the United States.

For 2021, DIHK is expecting the economy to grow by roughly 5%, Schweitzer said.

(Reporting by Michael Nienaber and Christian Kraemer; Editing by Riham Alkousaa and Angus MacSwan)