German service companies in good shape | Business| Economy and finance news from a German perspective | DW | 29.08.2012
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Business

German service companies in good shape

Germany appears to have shrugged off at least some of the economic troubles that plague its neighbors. The country's service providers are among those who have had little cause for complaint.

Analysts have been wondering whether it'll only be a matter of time for economic recession to reach Germany. Uncertainty hasn't been any bigger than now. And that doesn't come as a big surprise with all the talk of the eurozone debt crisis around. Despite brisk business in many areas, business confidence is declining in Germany.

Anton Börner, President of the Federation of German Wholesale, Foreign Trade and Service (BGA), said there's no reason not to keep calm and added that the economic situation is better than many experts forecast.

"I am and our affiliated companies are confident that there will not be a repeat of the 2009 crash," he said.

A dent, but no recession

Mny German companies went into a freefall in 2009 after the outbreak of the global financial crisis. Few businesses were spared and the crisis also shook service companies, which receive orders from the IT, logistics, marketing, distribution and facility management sectors.

BGA Chief Anton Börner on a rostrum

BGA Chief Anton Börner sees German service providers going from strength to strength

Service companies are widely seen as a barometer for the health of the whole economy as they depend directly on the well-being of their principals.

The BGA recently surveyed some 3,000 service firms and asked about their business prospects. Although the results weren't as ebullient as in last year's poll, they were positive overall.

The sector is logging growth at home and abroad. About a fourth of all revenues posted by domestic service providers come from outside Germany. The total turnover expected for 2012 amounts to 721 billion euros ($904.5 billion).

Service sector a mainstay

Germany's export of services has now reached goods export levels of 20 to 30 years ago, Börner said. Service providers have been focusing on the European continent and the eurozone in particular, which has made them vulnerable to negative developments in the single currency bloc.

Two of five service firms are active in North America, and about a third of them do business in China and Russia. "Geographic diversification makes service providers less susceptible to regional economic crises," Börner said.

Service provider revenues stand a good chance of increasing by another 2 percent in 2013. The unhampered cross-border movement of labor and services in the whole of the European Union that came into effect in May hasn't done any harm.

Only every 12th company polled complained about increased pricing pressures because of cheaper offers from firms in eastern Europe. At present, 7.2 million people are employed in the service sector in Germany, up from 6.4 million five years ago.

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