More purchasing power, more exports, more investments – the German economy is slowly getting back on track. But there is still a lot missing to make it a summer fairytale.
The Ifo Institute has raised its forecast for economic growth in Germany this year from 0.2 to 0.4 percent. “The German economy is slowly working its way out of the crisis,” said Ifo economic chief Timo Wollmershäuser in Berlin.
It is not yet a summer fairytale, but “new hope is emerging.” Next year, the Munich institute expects economic growth of 1.5 percent.
The purchasing power of private households is increasing. Global trade and industrial production are expected to continue to recover from the second half of the year. The easing of monetary policy is supporting investments, said the economic researcher. The Ifo Institute expects the European Central Bank to cut interest rates two more times this year.
Government deficit will fall significantly
Inflation is expected to continue to fall to 2.2 percent this year and 1.7 percent next year. However, the number of unemployed will rise this year from 2.6 million to 2.7 million. This corresponds to a rate of 5.9 percent. Next year, the number of unemployed will then fall again to 2.6 million. The number of employed people is expected to rise slightly from 45.9 million to 46.1 million this year and to 46.2 million next year.
According to the Ifo Institute, the national deficit will fall significantly, from 99 billion to 73 billion euros this year and to 54 billion euros next year. The internationally criticized current account surplus is expected to rise from 258 billion to 312 billion and then 306 billion euros.
The other institutes that, together with the Ifo Institute, prepare joint diagnoses for the federal government in the fall and spring presented their forecasts last week. They expect economic growth of between 0.2 and 0.4 percent this year, inflation of 2.2 to 2.4 percent and 2.7 million to 2.8 million unemployed in Germany. The EU Commission expects the European economy as a whole to grow by 1.0 percent this year.
Source: Stern
