“Bavaria's business model is in danger,” says the German Economic Institute. The basis is a studio that was already at the disposal of the Augsburger Allgemeine. According to the study, the growth prospects are bleak: the gross value added in Bavaria could only grow by just under 1.4 percent annually until 2035. In the period from 2010 to 2022 it was four percent. We should not be content with this: “Bavaria is a strong place that we must keep prepared for the future,” says Bertram Brossardt, CEO of the Bavarian Business Association (vbw), which commissioned the study.

For almost two thirds, digitalization is a topic of clear opportunity

Under the title “Re-Code Bavaria”, the study makes clear where companies see levers for new growth. For almost two thirds, digitalization is a topic of clear opportunity. 40 percent of companies also expect a boost from globalization. Companies, on the other hand, value climate protection cautiously; here the opportunities and risks are balanced. Almost all companies view demographic change negatively: more than 40 percent of respondents see risks due to a shortage of skilled workers, while only around eight percent see opportunities. About 700 Bavarian companies were surveyed.

The biggest risks for Bavaria are high personnel costs, too much bureaucracy, succession problems and distortions of international competition. “For Bavaria to be a future-proof business location, more speed is needed in the energy transition,” adds Brossardt.

Personnel costs and excess bureaucracy are among the biggest risks

According to the Bavarian Ministry of Economy, the Free State economy is in a better position compared to the rest of the country: while the German economy contracted in 2023 (-0.3 percent), Bavaria recorded slight growth (0.3 percent).

Economy Minister Hubert Aiwanger is therefore optimistic that the Bavarian economy will overcome the challenges in 2024: “The first Bavarian economic data for 2024 show a successful start to the year, for example in terms of exports, industrial production and commercial sales,” he told the Augsburg General.

Bavaria's economic performance is well above the national average

In Bavaria, economic output per capita was 57,343 euros, well above the national average of 48,750 euros. “We will continue to build on that,” says Aiwanger, looking ahead to next year. “The strength of Bavarian companies lies in their innovative capacity,” he is convinced. “Bavaria as a city with its excellent universities produces very good specialists, as demonstrated, for example, by the investment of the Apple group in Munich, which in 2023 invested one billion euros in its chip design center.”

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