German Business Leaders Shoot for Growth While Facing Challenging Economic Landscape, Annual J.P. Morgan Survey Finds
January 17 2024 - 3:00AM
Business Wire
Senior executives are looking for new ways to
innovate amid concerns over rising interest rates, geopolitical
tensions and the rise of artificial intelligence
More than three-fourths of German business leaders expect
increases in revenue (78%) and profits (75%) in the year ahead, up
9% and 16% respectively from 2023. At the same time, local leaders
are acutely aware of the tense macroeconomic situation, with half
(50%) expecting a recession in 2024, according to J.P. Morgan’s
fourth annual Germany Business Leaders Outlook survey.
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Recession expectations for German midsize
business leaders (Graphic: Business Wire)
“It’s crucial to recognize the dual nature of the sentiments
expressed by German business leaders—a balance between optimism and
caution—especially with the economic uncertainties continuing into
2024,” said Bernhard Brinker, Head of Commercial Banking, DACH
Region, J.P. Morgan. “This ambiguity is emblematic of the complex
landscape they navigate, weighing positive indicators against
potential challenges.”
In a survey of more than 250 C-suite executives from German
midsize companies, cautious optimism is central amid persisting
economic uncertainties. The hope is evident, with more than half
having an overall positive outlook on the global (58%) and national
(59%) economies. Additionally, 67% expect their capital
expenditures to increase significantly this year, up 11% from 2023,
and 70% expect their credit needs to also increase in the year
ahead, up 6% from 2023.
“While the German business community continues to be
simultaneously confronted with many different challenges, they have
staunch confidence in their own strengths coupled with the
resilience and innovative power of their industries,” said Stefan
Povaly, Head of Germany, Senior Country Officer, J.P. Morgan.
Staying Resilient Through Economic Headwinds While
expecting to grow in the year ahead, German business leaders remain
cautious given the rising costs to do business.
- Local executives cited rising interest rates (29%) as the top
significant challenge they’re facing in the year ahead, closely
followed by uncertain overall economic conditions (28%), the
adoption of artificial intelligence (AI) (28%), navigating the
labor environment (27%), as well as global unrest and geopolitical
concerns (27%).
- Persistently high inflation rates remain a pressing concern for
German business leaders, with nearly three-quarters (73%) reporting
experiencing rising costs due to inflation, up 10% from 2023.
Remaining Competitive Through Innovation, Expansion and
Talent Despite continued economic obstacles, German business
leaders are looking for ways to generate growth and stay
competitive.
When surveyed about their business plans over the next 12
months, business leaders plan to expand their businesses by:
- Introducing new products and services (50%, up 13% from
2023)
- Introducing new distribution channels (50%), up 9% from
2023
- Expanding into new international (39%) and domestic (41%)
geographical markets, down 4% from 2023
While the labor shortage continues in Germany, business leaders’
staffing expectations remain similar to 2023, with 43% planning to
add headcount in the year ahead.
Integrating AI Tools Into Business Processes 2023 was the
year in which AI—specifically generative AI—made its breakthrough.
German business leaders realize the importance of embracing this
technology if they are to remain successful in the long term, with
82% considering using or already using AI tools.
- Of those currently using or considering adopting AI, the most
frequently mentioned business use include product development
(56%), human resources and training (47%), business operations
(45%), financial management (44%) and costing (46%).
- German business leaders’ plans for AI are in line with their
U.K. (79%) and French (80%) counterparts.
For more information on the 2024 Germany Business Leaders
Outlook survey, visit
jpmorgan.com/business-leaders-outlook-DEU.
Survey Methodology J.P. Morgan’s Germany Business Leaders
Outlook survey was conducted online from November 16 – December 13,
2023. In total, 251 business leaders (CEOs, CFOs, heads of finance
and owners) from German midsize companies (annual revenues
generally ranging from €20 million to €2 billion) across various
industries participated in the survey. Results are within
statistical parameters for validity, and the error rate is +/- 6.0%
with a 95% confidence level.
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J.P. Morgan Germany, Kate Haywood, kate.l.haywood@jpmorgan.com
J.P. Morgan Commercial Banking, Bentley Weisel,
bentley.r.weisel@chase.com
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