Business leaders across Germany are less optimistic about the economy than they were a year ago, according to our 2023 Business Leaders Outlook survey. Just over half (53%) have a positive outlook about the national economy today; last year, more than three-fifths (62%) were optimistic.
Optimism around the global economy has fallen as well—to 56% from 64% last year. Notably, 59% of business leaders in Germany said they expect a recession in 2023. Compared with other countries surveyed at the same time, German leaders are less worried about a recession than their counterparts in the United Kingdom (69%), the United States (65%) and India (61%), but more concerned than leaders in France (53%) and Australia (46%).
Rising costs in general—and energy prices in particular—continue to weigh on German businesses. More than three-fourths of the companies experiencing inflation said energy prices are their biggest challenge; next in line are the increased costs of raw materials (63%) and supply chain issues (55%).
Despite the inflationary challenges, most leaders are still confident in their own companies. More than eight in 10 (83%) expect their revenues to increase or remain the same in 2023.
Economic outlook and expectations
Most German business leaders are optimistic about the global, national and local economies. But they’re even more optimistic about their own industries and companies.
Economic outlook for 2023
Global economy: Optimistic 56%; Neutral 20%; Pessimistic 24%
National economy: Optimistic 53%; Neutral 20%; Pessimistic 28%
Local economy: Optimistic 54%; Neutral 20%; Pessimistic 25%
Industry performance: Optimistic 63%; Neutral 24%; Pessimistic 12%
Company performance: Optimistic 73%; Neutral 17%; Pessimistic 10%
A downward shift
Optimism has weakened over the past 12 months. A year ago, three-fifths of German business leaders were optimistic about the national economy. Today, just over half hold a positive outlook.
National economy optimism
2022: 62%
2023: 53%
Bullish on their own businesses
The vast majority of businesses (83%) expect their revenues to grow or hold steady in 2023. A similar amount (85%) expect their capital expenditures to increase or remain the same.
Business expectations
Revenue/sales: Increase 69%; Remain the same 14%; Decrease 17%
Profits: Increase 59%; Remain the same 24%; Decrease 17%
Capital expenditures: Increase 56%; Remain the same 29%; Decrease 15%
Capital needs: Increase 64%; Remain the same 24%; Decrease 12%
Business challenges
German business leaders face many challenges today. Among them: persistent inflation, high energy prices, snarled supply chains and a shortage of available workers.
Top ways companies are adapting to inflation*
Raising prices: 53%
Automating processes: 38%
Strategic stockpiling: 36%
Prioritising most profitable products: 34%
Watching change in relative prices: 34%
Making changes to purchasing: 33%
*Among respondents who indicated they are experiencing inflation.
What's driving up the cost of doing business*
Energy prices: 77%
Raw materials: 63%
Supply chain: 55%
*Among respondents who indicated they are experiencing inflation.
Top responses to the labour shortage*
Increase wages and/or benefits: 52%
Offer flexible hours: 51%
Offer upskilling/training: 44%
Invest in automation: 40%
Provide flexible work location: 39%
*Among respondents who indicated they are planning to increase staff or maintain their current headcount.
Top external business threats
Energy prices: 23%
Cybersecurity and fraud: 17%
Russia-Ukraine War: 15%
General market volatility: 13%
Cost of debt/access to capital: 12%
China and trade/policy concerns: 9%
66% are considering investing in renewable sources of energy as a result of rising energy prices*.
*Among respondents who listed energy prices as their top external threat.
Cyberattacks experienced in last 6 months
Data breach: 37%
Business email compromise: 34%
Malware (including ransomware): 33%
Crashing of company’s online service or site: 33%
Security of data/integrity concerns: 31%
Social responsibility
Top areas of focus within corporate responsibility: Social 56%; Environmental 49%; Governance 48%
Top objectives motivating corporate responsibility*
Enhance marketing and find new customers: 54%
Establish/reinforce company’s position in community: 51%
Improve employee retention: 46%
*Among respondents who indicated they plan to focus on an area of corporate responsibility in 2023.
Business transitions and growth plans
Plans for business transfer
Yes, full transfer: 20%
Yes, partial transfer: 24%
Timeline to transfer business*
Within the next two years: 78%
Two or more years from now: 22%
*Among respondents who indicated they have a full or partial business transfer plan in place.
Growth strategies for the next 12 months
Expand into new international markets: 43%
Make strategic partnerships/investments: 42%
Expand into new domestic markets: 41%
Expand into new distribution channels: 41%
Introduce new products/services: 37%
About the survey
Started in 2021, the J.P. Morgan Business Leaders Outlook: Germany survey is a snapshot capturing the concerns and expectations of senior business leaders whose companies have annual revenues between €20 million and €2 billion.
This year, 254 respondents completed the online survey between 21 November and 8 December, 2022. Results are within statistical parameters for validity; the error rate is plus or minus 6.2% at the 95% confidence interval.
Who took the survey
CFO: 44%
Other C-level: 24%
CEO/chairman/chairwoman: 18%
Owner/founder: 12%
Other: 3%
Company size by number of employees
50-99: 5%
100-249: 15%
250-499: 22%
500-999: 26%
1,000-4,999: 23%
5,000+: 8%
Company size by annual revenue
€20mm-€100mm: 44%
€101mm-€499mm: 28%
€500mm-€1b: 20%
€1b-€2b: 8%
Company by industry
Healthcare: 12%; higher education: 3%; home services: 6%; industrials: 9%; manufacturing: 20%; nonprofit: 1%; oil and gas: 4%; other professional/non-finance: 2%; real estate: 1%; restaurants/food services: 1%; technology: 14%; transportation/logistics: 7%; wholesale/retail: 15%; other: 5%
Note: Some numbers may not equal 100% due to rounding.
Contributors
Stefan Povaly
Head of Germany, Senior Country Officer J.P. Morgan
Michele Iozzolino
Head of Investment Banking, Germany J.P. Morgan
Bernhard Brinker
Head of Commercial Banking, DACH Region J.P. Morgan
Alexander Voigt
Head of Corporate Debt Capital Markets, DACH Region J.P. Morgan
Viktoria Boecker
Head of Commercial Banking Treasury Management, DACH Region J.P. Morgan
Håkan Strängh
Head of Private Bank, Germany J.P. Morgan
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content.
