Struggling regional economy: pace of recovery remains sluggish
The Osnabrück-Emsland-Grafschaft Bentheim region, known for its economic significance and diversity, is currently grappling with a series of economic challenges [1]. Despite the strong sectors such as automotive, metal, and paper industries, the local economy is facing modern hurdles like digitalisation and labour shortages [2].
According to Frank Hesse, the head of economic policy at the IHK, a strong foreign trade or recovering domestic demand has yet to materialise as a driving force for local businesses [3]. The current business situation in the region is still assessed as poor, with 17% of companies expressing dissatisfaction [3].
One of the most affected sectors is the construction industry, where every fifth default affects the sector, affecting over 4,000 employees [3]. The default rate in the construction sector has risen from 1.68% to 2.22% [3]. In the manufacturing sector, 31 companies (1.33%) have defaulted [3].
The retail sector, despite a slight recovery, is struggling with weak demand and higher prices. While the retail sector's default rate has decreased to 1.23%, the outlook remains very negative in the wholesale sector [3]. The transport sector remains subdued, partly due to the increased toll for trucks [3].
The only bright spot is the outlook for exports, which is improving in line with a recovering global trade [3]. The 'growth package' of the federal government can provide positive impulses, and the laws must be implemented quickly for them to take effect [3]. An important signal is the extension and expansion of the degressive depreciation for investments [3].
The default rate in the hospitality industry has risen to 2.75% [3]. To address these challenges, potential solutions focus on leveraging digital technology, promoting circular economy principles, and securing skilled workforce influx while supporting small businesses technologically and financially [2].
Seasonal labor practices are also under scrutiny to ensure fair wages, indicating social challenges linked to employment quality [5]. There are initiatives addressing these issues, such as regional funding programs to promote digital transformation in economy, society, and administration [2]. Additionally, there is active recruitment of skilled workers from abroad [2].
Despite these challenges, the economic climate index for the Osnabrück-Emsland-Grafschaft Bentheim region stands at 83 points at the end of Q2 2024, well below the long-term average of 102 points [3]. The economic climate index for industry and trade is also poor, with only 11% of industrial companies reporting a good business situation and 42% reporting a poor situation [3]. Expectations for the coming months remain at a similarly low level, with 17% expecting a further deterioration in the economy [3].
References:
- Regional Economic Development in the Osnabrück-Emsland-Grafschaft Bentheim Region
- Strategic Programmes Addressing Economic Challenges in the Osnabrück-Emsland-Grafschaft Bentheim Region
- Economic Climate Index for the Osnabrück-Emsland-Grafschaft Bentheim Region
- Digital Transformation and Labour Shortages in the Osnabrück-Emsland-Grafschaft Bentheim Region
- Seasonal Labour Practices and Fair Wages in the Osnabrück-Emsland-Grafschaft Bentheim Region
- The manufacturing industry, particularly with 31 companies defaulting, is facing significant financial challenges in the Osnabrück-Emsland-Grafschaft Bentheim region.
- Small businesses in the retail sector are grappling with weak demand and higher prices, despite a slight recovery, further exacerbating the economic hardships.
- As the default rate in the hospitality industry rises to 2.75%, it becomes increasingly crucial to strengthen the sector through digital technology, circular economy principles, and securing a skilled workforce influx, while also addressing concerns about fair wages.
