Production in industry has fallen again. Economists at the Hans Böckler Foundation have calculated an increased probability that the German economy will shrink in the spring.
Economic researchers at the Hans Böckler Foundation see an increased risk of a recession in the German economy by the end of April. The economic indicator from the Institute for Macroeconomics and Economic Research (IMK) points to this, the foundation reported on Monday in Düsseldorf.
The slight increase in the risk of recession is primarily due to the fact that production in the manufacturing sector fell again according to the most recent data available in December. The researchers see further negative factors in recent weak retail sales and an above-average number of corporate bankruptcies compared to before the pandemic.
Because orders for industry have recently increased, the probability of a recession has not increased any further. However, this positive development should not be overestimated, explained IMK economic expert Thomas Theobald. It is primarily due to large orders in aircraft construction, which do not reflect the underlying economic dynamics as well.
“With every month the risk grows that the economic slump that we have been experiencing for several quarters will turn into a chronic weakness in growth,” said IMK director Sebastian Dullien, according to the statement. In this situation, positive signals are required from both the European Central Bank and the federal government: “The ECB should lower interest rates as soon as possible. And German politicians should introduce realistic, quickly effective measures.” These include extended depreciation conditions for companies, as provided for in the Growth Opportunities Act.
Source: Stern
