83% Of German Firms With International Exposure Warn of Collapsing Revenues

A new survey via the German Chambers of Commerce (reported by Reuters) said 83% of domestic firms with high international exposure had experienced a collapse in revenues.  

The survey is an eye-opener for Europe’s largest economy, and one of the largest exporting nations in the world, suggesting a global economic recovery in the shape of a “V” is not feasible for the back half of 2020. About 15% of the 3,300 companies surveyed said their annual turnover is expected to be halved.

It was noted the impact of the virus-induced downturn, whereas at the start of the pandemic, crushed travel and tourism, has now impacted other sectors and rippled through the economy in the form of a demand shock. 

Fifty-nine percent of respondents this month (July) warned of slumping demand for their products and services, up from 57% in April. 

Under such conditions, firms are unwilling to invest – more than half of the respondents said they’re cutting CapEx abroad, compared with 35% in April.

We noted on Tuesday, global CapEx is expected to be slashed, on average, 12%, which is much larger than the 11.3% decline during the global financial crisis in 2008-09. Global capital expenditure weakness suggests a weak recovery is ahead.

German Chambers of Industry and Commerce released a report on Wednesday indicating exports will drop by 15% in 2020 with a slight recovery in 2021. 

The German government has unveiled a $146 billion stimulus package to jump-start the severely damaged economy. However, it appears the recovery, so far, has been a dead cat bounce that will not revert to 2019 growth activity levels for the next several years, or longer… 

German industrial production has a long ways to go…