Düsseldorf After the catastrophe year 2020, optimism dominates – more cautiously – in the German economy. This is shown by a survey by the employer-related IW Institute in Cologne among more than 2,200 companies in 43 industry associations.
The optimism is appropriate, says IW boss Michael Hüther in an interview with the Handelsblatt. In his opinion, most industries will find their way out of the crisis quickly, but not all. A few will take many more years. The economist thinks nothing of a corona solos.
Read the full interview here
Professor Hüther, do you remember how you looked ahead a year ago?
Confidence dominated that the industrial recession that had been running since 2018 will come to an end in 2020.
Right, but then everything turned out differently. 2020 was the year of the home office and digital conferences, which are part of everyday life even in many schools. Will the pandemic trigger the hoped-for digitization boost?
Some things will remain in the post-corona times. Many in companies see that it is not worth traveling to every meeting. On the other hand, seeing and meeting each other is not the same as speaking in online conferences. The pandemic won’t change that either. In addition: what was scarce – the direct personal exchange – is re-valued.
Mass vaccinations begin, is optimism for 2021 appropriate?
Yes I think so. For the financial markets, Corona is only visible in the rearview mirror, and this view is justified with a view to industry. With the vaccinations we get the decisive lever to normalize public life. That is the prerequisite for the recovery in consumption in the new year.
Which industries emerge from the crisis quickly and which more slowly?
Not only the digital industries, but also the construction sector and the trades are robustly coming through the crisis. It looks more complicated in the automotive sector. After Corona, it is a matter of coping with structural change including emission-free driving. Industries like aviation will take a very long time. Or shipbuilding with its premium products such as luxury cruise ships. Here normalization will take years until possibly 2025.
Will there be catch-up effects because people party, travel and fly more?
There will certainly be catch-up effects in air travel for tourism, and trips abroad will be in great demand. It will be different in the business area, because not everyone will come for a two-hour routine meeting.
If you look one year into the future: how much of the crisis is behind us?
Hopefully the pandemic is completely behind us. In a year’s time, questions of structural change will dominate, such as the CO2 reduction of 55 percent planned by 2030. How do we react to this in energy-intensive industries and in the automotive sector? Answers will be sought to this.
Are you concerned about the long-term financial consequences of the multi-billion dollar aid programs?
The debt ratio is increasing in Germany, but not as much as in the financial crisis ten years ago. In addition, the state pays no interest on its new promissory notes; That should stay that way for the time being due to the age-related savings. There is no reason for a hasty, economically burdensome repayment.
So no new solos?
For heaven’s sake. There is no reason whatsoever for a new solos, a burden compensation or other special charges. Investments are much more important, for example in smart digital business models and in digital infrastructure, where Germany has still not really made any headway. Here are the levers for future growth in order to lower the debt ratio again.
More: IW survey at the turn of the year shows confidence in the German economy