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EY: German industrial engine in ”good shape”, after 2 years of Covid disruption

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A majority of the small and medium-sized companies that power the German economy are in surprisingly good shape nearly two years into the coronavirus pandemic, according to a survey by consulting firm EY published Sunday and quoted by Bloomberg.

Among the 800 of Germany’s so-called “Mittelstand” companies polled, 91% described the state of their business as good or rather good, while only 9% said it was either bad or tended toward bad, EY said. Most upbeat were firms in chemicals, pharma, construction and machinery, while the auto sector was the most negative about the outlook.

Michael Marbler, a partner at EY, said the business situation for Mittelstand companies in Europe’s largest economy was “still remarkably stable” and that most companies had “learned to deal with the pandemic.”

“However, it is far from being all sunshine,” Marbler said. Many retailers are “groaning under the coronavirus restrictions,” which “massively affected the key Christmas business,” and the auto sector is suffering from the semiconductor crisis, he added.

Companies indicated that a scarcity of qualified workers represents the biggest threat to their business, with 67% saying it was a major concern, up from 54% in last year’s survey. Rising or volatile prices for raw materials was their next biggest worry, followed by IT security and high or volatile energy prices.

More than 99% of German companies are classified as belonging to the Mittelstand, and they account for more than half of all jobs, according to industry lobby BVMW.

Germany is the biggest economy in the EU and the most important export destination for Romanian exports.