The German economy is weakening and is not recovering so quickly – almost all sectors are affected. But there is a glimmer of hope.
The Ifo Institute expects German economic output to fall by 0.4 percent this year, with inflation at 6.0 percent and almost 2.6 million unemployed. “Contrary to what was previously expected, the recovery is unlikely to materialize in the second half of the year,” said Ifo economics chief Timo Wollmershäuser in Berlin: “The cooling is continuing, and there is a tendency towards a lull in almost all sectors.”
In their autumn forecast, the Munich economic researchers are somewhat more pessimistic than they were in June with regard to inflation and unemployment for both this year and next. They only confirmed their economic forecast for the current year: “Accordingly, German economic output will shrink by 0.4 percent. In the coming year it will then increase by 1.4 percent, 0.1 percentage points less than previously thought.”
One ray of hope is private consumption: it is likely to recover gradually. “The increase in disposable household income will remain strong and, with inflation rates slowly falling, will also lead to an increase in purchasing power,” said Wollmershäuser. The Ifo Institute expects consumer prices to rise by 2.6 percent next year. The number of unemployed is likely to be just under 2.6 million next year. The state’s funding gap will only slowly decrease, from 92 billion euros this year to 80 billion in the coming year.
Source: Stern
