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17. June 2020The Federal Association of Logistics (BVL) draws a bleak balance in its logistics indicator for the time of the Corona crisis. Although the easing of restrictions has brought a slight recovery, everything is still far from the usual figures.
(Press release / Bremen) The business climate of the German logistics industry has deteriorated significantly. The indicator stood at 79.4 points in May, noticeably above the previous month (72.9), but the value in April marked a historic low for the time series starting in 2005. This is evident from the monthly surveys on the logistics indicator conducted by the ifo Institute on behalf of the Federal Association of Logistics e.V. (BVL) as part of its economic surveys.
Business expectations improved in May, reflecting the gradual easing of strict restrictions due to the Corona pandemic and hopes for further relaxations in the coming months. However, with an indicator value of 81.7, they still remained firmly in negative territory. The current business situation, on the other hand, was assessed as unfavorable again, marking the third consecutive month of decline. Only at the peak of the global economic crisis starting in 2008 did the situation appear – albeit marginally – less unfavorable.
Logistics Service Providers and Users Equally Affected
A similar development can be observed for logistics service providers: The business climate improved slightly due to less skeptical business perspectives. However, the indicator value stood at a very low level of 74.5 points. The current business situation worsened again and marked the lowest value in the time series available for the period since 2005.
In the area of logistics users from trade and industry, the survey results paint a nearly analogous picture. Here too, the business climate indicator deteriorated significantly in March and April. Due to decreasing pessimism regarding developments in the next six months, the business climate improved again in May – but still remained firmly in negative territory. The business situation also continued to worsen in this area.
Recovery This Year Unlikely
The Corona pandemic and the associated restrictions have firmly grasped the economy. The slight economic recovery that was emerging at the beginning of the year was stifled in its infancy. It is certain that Germany’s economic output will be lower in 2020 than in the previous year. However, there remains high uncertainty about the magnitude of this decline, even though some of the initial assumptions in the economic forecasts have now been refined by the availability of current indicators. According to estimates by the ifo Institute, economic output is likely to have been reduced by about 17% on average during the government-mandated shutdown. Since the end of April, a gradual easing of shutdown measures and a resumption of the production of goods and services has also been evident. However, it remains unclear how quickly the economy will recover. An evaluation of the ifo surveys from May 2020 concluded that German companies consider a normalization of their business situation within nine months to be the most likely scenario. After a sharp decline of 12.4% in the second quarter of 2020, the economy is expected to recover by mid-next year.
Hopes Rest on 2021
The German economy is expected to shrink by 6.6% overall this year and grow by 10.2% from that low level next year. In addition to the most likely duration of normalization, companies also provided information about the range they expect. In the best-case scenario, companies indicated that normalization could take an average of only five months. In that case, economic output would shrink by only 3.9% this year, and growth next year would be 7.4%. In the worst-case scenario, with an average normalization duration of 16 months, economic output would shrink by 9.3% this year and grow by 9.5% next year.
Uncertain Forecasts
The recovery would then extend well into 2022. Uncertainty remains regarding the further course of infections and the medium-term consequences of the Corona crisis. The forecasts of the ifo Institute have so far been made under the assumption that the coronavirus will not be defeated in the coming months, but its spread can be contained and a second wave of infections avoided. A wave of insolvencies has also been ruled out, both in Germany and in its sales and procurement markets, which could lead to upheavals in the financial system and require a realignment of global value chains.
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