Low economic growth during the coming year is likely "because Berlin cannot escape the deteriorating economic conditions," IBB said Wednesday. "The impact of high energy prices, delays in supply chains and a high number of people coming down with flu and Covid are putting additional strain on businesses and slowing down the economy in the first half of 2023." Ultimately, Berlin's economy could "end up just above zero," according to the state-owned development bank.
Investment bank expects low growth for 2023
Investitionsbank Berlin (IBB) expects the capital city to have a difficult economic year in 2023, with growth likely to be minimal.
Growth of around 2.5 percent possible in 2022
For the current year, IBB's economists believe growth of around 2.5 percent is possible - partly due to a surprisingly good third quarter. However, "The recovery in 2022 that emerged after the pandemic could not fully unfold due to the energy crisis," said Hinrich Holm, CEO of IBB. "Due to persistently high prices, energy-intensive companies of small and medium size in particular could be having problems in the next two quarters."
Positive development in the healthcare sector
According to the IBB, the service sectors and the information and communications sector have recently developed particularly positively. By contrast, the postal and courier services sector, which expanded strongly during the pandemic, had to accept a drop in sales after the end of many Coronavirus measures.
Berlin labor market remains stable
According to IBB, Berlin's labor market continues to be robust. According to the regional directorate of the Federal Employment Agency, 1.67 million people were employed in the capital in September, which is 3.9 percent more than in the same month of the previous year. In November, almost 20,000 jobs were open.
Concern about complication of housing construction
The development bank assumes that the "rapidly rising construction interest rates," the shortage of skilled workers, supply bottlenecks and price increases will slow down residential construction. "Even if purchase prices fall somewhat in the future, the bottom line is that financing a property in Berlin will become more expensive, so that more people will remain on the rental market for the time being," it said. Accordingly, demand for housing remains high.