High energy prices from Ukraine war could hit 62% of German companies

German companies anticipate being hit by higher energy prices with the standoff of Russia and the West and the continuation of the war on Ukraine.

A survey of 200 companies, conducted by the German Economic Institute (IW) during the first week of the war, found that 62 percent of companies expect "rather large or very large burdens" as a result of increased energy prices.

In the industrial segment, including chemicals and pharmaceutical sector, 70 percent of participants expected large impact from higher energy costs, IW said March 9.

Almost every third company surveyed expects problems as a result of "missing gas supplies."

Many companies use gas as an energy source, but within the industry, for example in large chemical and pharmaceutical companies, it is also used as raw materials.

Accordingly, 37 percent of industrial companies expect charges due to the shortage of gas as feedstock.

In addition to gas supply disruptions, companies are also concerned about the failure of suppliers, such as software providers in Ukraine who had to stop work.

"This means that individual parts are now missing, as was the case in the automotive industry recently," said IW.

For 31 percent of the companies surveyed, canceled deliveries will become a burden. Among industrial companies, the figure is slightly higher at 39 percent.

"The war not only brings incredible suffering to the people in Ukraine, it also destroys part of the economic basis of life and the economic production potential," said Michael Groemling, IW economic expert.

"The problems that Europe felt as a result of the (COVID-19) pandemic are being exacerbated by Putin's war of aggression," he added.

The economic recovery, he concluded, "is now dragging on."