With the Ukraine war and its economic consequences, the business climate in the digital industry has clouded over. The Bitkom ifo digital index for the current business situation fell by 2.8 to 39.8 points in March.
In March 2022, the Bitkom-ifo digital index on the current business situation in the digital industry fell by 2.8 to 39.8 points. The business expectations for the coming six months fell to minus 3.9 points and thus into negative territory. Compared to the previous month, this is a minus of 21.8 points. The Bitkom-ifo digital index, calculated from the assessment of the business situation and expectations, fell by 13.1 points and is now listed at 16.8 points. The Ukraine war caused a fall in indices.
“The Russian criminal war of aggression in Ukraine has reversed the previously prevailing confidence in an economic recovery. Despite the ongoing excellent current business situation, expectations for the next six months are subdued”. “There is little consolation in the fact that the business climate in the digital industry is still much better than in the economy as a whole. This war reminds us of the importance of digital sovereignty and resilience. Digital technologies are indispensable to strengthen the security and ability of democracies to act, especially in crises such as the pandemic and in the event of military threats.”
Stable Prices And High Demand For Staff
Despite the gloomy mood, companies want to create additional jobs. Although employment expectations fell by 4.1 points, they were still clearly up at 30.2 points. Most companies plan to hire other workers in the next three months. “The demand for digital specialists remains high,”. According to Berg, the Bitkom industry is proving to be an anchor of stability in the labour market and concerning accelerated inflation. Despite the general inflation of more than 7 per cent, only moderate price increases are expected for digital goods and services. The price index rose by just 0.7 to 37.2 points.
Ukraine War: Sentiment In The Economy Has Deteriorated
In the economy, the mood has deteriorated massively with the Ukraine war. The IFO business climate fell by 16.8 points and turned negative at 1.4 points. The business situation fell by 3.7 to 21.1 points. Expectations fell sharply by 28.0 points and were clearly in negative territory at -21.7 points. The sanctions imposed by the EU against Russia because of the Ukraine war are supported by an overwhelming majority of companies in the digital economy. Ninety-six per cent approve of the measures, and 66 per cent also say that they should be tightened if necessary. At the same time, every second company assumes that the Ukraine war will harm their business results.
“The results are not representative but give a meaningful first picture of the mood. The digital industry stands united on the side of Ukraine. Together we must do what is possible to stop the killing and destruction”. “With its many young tech companies and committed IT, specialists, Ukraine is an important digital economy partner.” Eighteen per cent of digital companies have employees in Ukraine or work with freelancers there.
War in Ukraine: More and more companies are being hit by sanctionsThirteen per cent of the companies are already affected by the sanctions, for example, due to the loss of customers, the loss of development partners, the loss of employees or a lack of raw and basic materials or components. Twelve per cent of companies fear future difficulties in procuring raw materials or intermediate products. Overall, every third company (32 per cent) states that they have business relationships in Ukraine, Russia or Belarus.
Even though many companies are affected, the call for government support has been somewhat muted. One in three companies (36 per cent) would like financial support if the sanctions have an economic impact, and 15 per cent would be in favour of low-cost loans in the current situation. One in five companies (19 per cent) favours extended legal protection, for example, in the case of claims for damages from previous business partners. And every fourth company generally expects better and more reliable information from politicians. Also, every fourth company currently sees no need for support from politicians. Sixteen per cent are still undecided and do not provide any information.