The German economy is unlikely to register significant growth this year, according to a report by a leading industrial lobby group that describes the grim condition of Europe’s largest economy. The negative outlook appears after several weak signs of improvement since late 2019. Exporters who hoped to take advantage of the US-China trade agreement are now facing a temporary halt to Chinese manufacturers and transport blockages amid the spread of the coronavirus, and investment and employment plans remain frozen.

Although the Bundesbank is still trying to find some positive momentum in the current situation, arguing with the improved mood compared to last year’s levels, the latest forecasts of the Association of German Chambers of Industry and Commerce (DIHK) are sunk. Although they shed light on their forecast for 2020, much of the 0.7% expansion in question will be due to statistical effects and additional business days.

The government, for its part, is more optimistic, raising its growth forecast for this year by 10 percentage points to 1.1% in January.

“Still, many companies expect businesses to perform worse this year than they do better”, said DIHK Chief Executive, Martin Wansleben. In his words, the association is far from the euphoria of an impending economic upswing.

After the outbreak of the epidemic in China, sentiment indicators sank, and investors’ expectations for the heavy export sectors worsened particularly sharply.

Giants such as Adidas AG and Volkswagen AG are among the companies forced to temporarily close their stores and factories in recent weeks, with this effect inevitably going down and up the chain.

The German authorities are involved in a number of structural issues, including the transition of the automotive industry such as electric vehicles, digitization, the shift to greener energy and the lack of skilled labor.

About 50% of the 26,000 companies surveyed in the December-January period cite economic policy as a risk to their business.