Saar economy in crisis: stagnation until the end of the year!

Saar economy in crisis: stagnation until the end of the year!

The economic situation in Saarland remains tense. According to the latest reports from the Saarland Chamber of Industry and Commerce, there is little prospect of economic growth for the rest of the year. Companies in Saarland have to prepare for stagnating business and negative expectations for the future. The IHK situation indicator shows that companies' capacities are still underutilized, which promises little hope of improvement, especially in the coming months. The indicator remained at minus 3.1 points, which has been the case since September. The expectations indicator, which shows what economic situation companies expect in the next six months, has also declined from a slight increase in September and is now at minus 14.1 points, the same as in August.

These stagnant figures are worrying and suggest that many companies are increasingly focusing on cost reductions without any hope of real improvement. A look at the most important challenges immediately shows the main pillars of the problem: rising energy and unit labor costs, weak demand for consumer and capital goods and the customs deal between the EU and the USA, which reduces the profitability of the export business. According to the IHK, it is essential to implement reform impulses in order to relieve the situation of companies, as IHK Managing Director Dr. Frank Thome demands.

A mixed mood

Where there is light, there is also shadow, and that also applies to the current economic situation in Saarland. A survey of around 300 companies and more than 100,000 employees shows an inconsistent picture of the situation. While 21% of companies rate their situation as good or very good, 24% rate their situation as bad. The industry is divided: there is a positive mood in the ceramics industry, while the rubber and plastics industries and foundries are in difficulties. The challenges are particularly enormous in the steel industry, as weak demand, high investment requirements and global overcapacity are putting strain on the industry.

In the service sector, however, 77% of companies can report good or satisfactory business. The IT industry in particular benefits from the demand for digitalization solutions. While banks and insurance companies as well as the hotel and catering industry are satisfied, retail and logistics show a mixed picture.

Looking into the future

The forecasts for the next six months are rather bleak. Only 4% of companies expect their business to improve, while 19% expect worse times. A majority of 77% see the likelihood that the current business situation will continue. Structural challenges such as high location costs, long planning and approval processes or shortages of skilled workers continue to be critical issues that hinder positive development.

Saarland is therefore faced with the challenge of improving the framework conditions. Necessities such as lower energy prices, faster administrative procedures and more flexible labor market policies are urgently required. A change in economic policy could not only bring relief for companies, but also help Saarland emerge from economic stagnation. We hope that those responsible for politics will take this need for action into account and that the urgently needed growth will be stimulated.