Hamburg's economy: slight upswing or uncertain future?

Hamburg's economy: slight upswing or uncertain future?

According to the Hamburg Chamber of Commerce, the economic situation in Hamburg is showing initial positive signs, but caution is advised. The survey, which collected the opinions of 591 companies, shows a business climate score of 94.9 points in the second quarter of 2023, an increase of ten points compared to the previous quarter. Despite this slight improvement, Malte Heyne, Managing Director of the Chamber of Commerce, warns against hasty conclusions about an economic upswing. In the long term, the mood in Hamburg's economy remains rather poor, as the average value since 2000 has been only 106.5 points. The specific reasons for the positive development were not mentioned, but reference was made to the uncertainties in the international environment and the new government in Hamburg and Berlin. The Süddeutsche Zeitung reports.

In a broader context, the Association of German Chambers of Industry and Commerce (DIHK) also sees a great need for action in the economy. The currently stagnating DIHK sentiment index also remains at 94.9 points, which puts companies in pessimistic territory. In an external survey that recorded the assessments of over 23,000 companies from various industries and regions, DIHK Managing Director Helena Melnikov expressed concern about the lack of economic awakening. The forecast for 2025 calls for a decline in gross domestic product of 0.3 percent, which even poses the risk that economic output will decline for the third year in a row. The DIHK provides further comprehensive information.

Risks and challenges

A majority of companies see the economic policy framework as the greatest risk. Around 59 percent of survey participants fear that domestic demand (57 percent) and rising labor costs (56 percent) will put additional strain on the economy. Many energy-intensive companies in particular report tighter conditions due to high energy and raw material prices, which leads to urgency in 71 percent of cases. The positive development of business expectations remains subdued, with only 16 percent of companies showing optimism for the future, while 26 percent remain pessimistic and rate the situation as the worst since the corona pandemic.

The uncertainties about the economic policy course, coupled with structural problems, are putting additional strain on companies. While there are signs of a slight recovery in industry and construction, exports report waning momentum and investment intentions remain weak. Almost a third of companies plan to reduce future investments, which is reflected in the negative investment balance of minus 7 points, well below the long-term average.

Demands for political action

Melnikov calls on those responsible to take concise political signals and measures to improve the economic situation. This includes, among other things, the reduction in electricity tax, the introduction of a one-in-two-out rule, easier depreciation and a halving of transmission network fees. Without a concerted effort, it will be difficult to overcome the economic downturn and restore the necessary trust to companies.