ifo Dresden: Threat to Survival of Eastern German Companies Increases Only Slightly
Among eastern German companies, 14 percent believe the coronavirus pandemic threatens their survival, finds an ifo survey for December. This figure is barely higher than in the summer, when it stood at 13.8 percent. “Surprisingly, the new contact restrictions didn’t further increase the threat to companies’ survival as might have been expected,” says Joachim Ragnitz from the ifo Institute’s Dresden Branch.
In eastern German industry, 10.0 percent of the companies surveyed in December said their survival was at risk from the coronavirus crisis and its consequences – considerably more than for Germany as a whole (5.7 percent). “This is probably related to the fact that eastern German companies are smaller on average and their capital adequacy is lower,” Ragnitz says. In June 2021, slightly fewer eastern German companies had felt at risk, at 8.9 percent.
Among eastern German service providers, 16.9 percent felt at risk in December. The situation has improved somewhat here, with the figure down from 18 percent in June. In Germany as a whole, the service sector is slightly more affected (20.4 percent). Companies in tourism, events, and hospitality in particular see major risks for the future.
In eastern German trade, the proportion of companies that feel their survival is threatened rose slightly in December to 10.4 percent. In summer, the figure was 8.3 percent. This means that the threat to survival is less pronounced in eastern Germany than in Germany as a whole (11.6 percent).
Eastern German construction is seeing some striking developments, with 11.6 percent of companies in this sector reporting in December that they felt their survival is threatened. This represents a marked increase on the previous survey (8.7 percent). In Germany as a whole, significantly fewer companies felt at risk, at 5.1 percent. The reasons for the difficult situation in eastern Germany are likely to be weaker construction activity in those states and a coronavirus-related shortage of labor from neighboring countries.
