Germany’s internet economy grows despite war in Ukraine – EURACTIV.com

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Germany’s digital industry has continued to grow despite Russia’s war in Ukraine, although uncertainty in the industry and among customers remains high, according to a recent report by digital association eco. EURACTIV Germany reports.

The report, released Tuesday (May 10) by environmental and international consultancy Arthur D, looked at the potential impact of the war in Ukraine on Germany’s internet economy.

Compared to other sectors, the impact on the digital industry has proven to be limited, even with continued inflation as well as sectoral self-restraints, according to the report. The negative effects of the sanctions are overcompensated by the price increases, he added.

“The internet industry is a reliable partner in the crisis,” Eco CEO Oliver Süme said in a press briefing on Tuesday, adding that the policy should help reduce uncertainty in the market.

According to eco, it would be desirable to have a rapid and reliable design of a transatlantic agreement on data protection or measures to strengthen digital sovereignty and energy independence.

Maik Außendorf, digital policy spokesperson for the Greens in the German Bundestag, told EURACTIV that “we in politics are challenged to create the framework conditions for the expected growth and at the same time to guarantee German SMEs a high level of IT security”.

Growth projections

In the report, analysts forecast steady growth for the internet economy through 2025 with a healthy average annual growth of 12.2%. This would result in an increase in turnover of 258 billion euros.

However, given that demand could flatten out in some regions or the crisis could lead consumers to cut non-essential spending, a medium-term correction phase is expected from 2023, according to the report.

According to the report, the increased transition to home offices during the pandemic has already led to increased sales in the internet economy, as a significant increase in demand for services has been felt in many segments.

Continued inflation and the war in Ukraine are now leading to price increases and thus prolonging the trend of income growth, at least in the short term. But eco pointed out that interest rates, energy and production costs are also rising in some cases, meaning higher sales shouldn’t translate to higher profitability.

A previous Index by digital association Bitkom painted a bleaker picture of the future of the digital industry in Germany, where assessments of the situation and business expectations had deteriorated in light of the Russian invasion. .

It is “small consolation that the business climate in the digital industry continues to be much better than in the economy as a whole,” Bitkom Chairman Achim Berg said in a press release.

A fashionable digital sector

Of course, the tense situation “does not leave our industry unscathed”, eco’s Süme said. “Nevertheless, we continue to see growth trends across all segments, which shows that digitalization is not a short-term trend, but that we must continue to invest in the sustainable digital transformation of the economy and society,” Süme said.

The Green Party politician Außendorf also pointed out that the internet economy is a powerful engine for the German economy, even in times of crisis.

However, according to Außendorf, in addition to the conversion of the energy supply, it was also necessary to “fundamentally test the previous IT security policy and implement various (immediate) measures to increase IT security as quickly as possible. possible”.

According to the report, the industry segment with the highest growth rate is “services and applications,” especially since cybersecurity services are expected to be in demand in the near future.

The increase in war-related attacks leads to “an increased willingness to spend more on cybersecurity products.” It is also a great opportunity for local solution providers.

Although a massive cyberwar against German companies is unlikely, the uncertainty and risk “remain high and should be avoided in the future through safer and more robust IT systems and infrastructure,” the report said.

[Edited by Oliver Noyan/Zoran Radosavljevic]

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