German Industry Reels as Conflict Drives Up Costs and Disrupts Supply Chains
A survey conducted as part of the monthly Ifo Business Climate Index reveals that German industry is already feeling the impact of the conflict, the Munich-based Ifo Institute announced on Tuesday.
Only nine percent of companies report being unaffected at present. "The conflict is hitting industry directly, but above all, it is creating significant uncertainty," said Klaus Wohlrabe, head of the Ifo surveys. "Many firms are bracing for additional burdens in the months ahead."
When asked about the reasons, 78 percent of industrial companies cited rising energy prices as the primary concern. Meanwhile, 36 percent each pointed to disruptions in shipping routes and supply shortages for intermediate goods and raw materials. Sixteen percent of businesses fear disruptions to air freight. Roughly a quarter (24 percent) anticipate declining demand in key export markets.
Beyond these challenges, many companies also face financial risks, including volatile freight and logistics costs, higher insurance premiums, and increased payment defaults. "The findings show that the economic repercussions of the Iran conflict are already becoming apparent and could intensify through multiple channels," Wohlrabe noted. "The longer this uncertainty persists, the greater the economic strain on businesses will be."
