In June, the research institute predicted growth of 0.2 percent. Now researchers are assuming that the economy will shrink. The BGA association, meanwhile, is expecting less foreign trade.
The Kiel-based institute’s autumn forecast says that Germany’s economic output will shrink this year. Gross domestic product is likely to fall by 0.1 percent compared to last year. Private consumption is weak, and industry and the construction sector are in deeper recession.
In its summer forecast, the institute had expected growth of 0.2 percent. “Overall, the German economy is stuttering into an anemic recovery, partly because economic policy is unable to set reliable course,” said IfW economic chief Stefan Kooths.
The institute predicts that gross domestic product will increase again in 2025 and 2026. Next year, the Kiel Institute for the World Economy expects economic growth of 0.5 percent; previously, however, 1.1 percent was expected. According to an initial estimate, the increase in 2026 will be 1.1 percent.
IfW President: Crisis also of a structural nature
“The German economy is increasingly caught in a crisis that is not only cyclical but also structural in nature,” said IfW President Moritz Schularick. The federal government’s budget cuts are putting a strain on the economy and the European Central Bank’s interest rate turnaround is coming too late.
According to Schularick, old core industries have not reacted to changes for too long. The asylum debate is poisoning the dialogue about attracting skilled workers from abroad. “As long as this continues, we can watch as our growth potential becomes smaller and smaller,” he said.
BGA Association expects less foreign trade
The Federal Association of Wholesale, Foreign Trade and Services (BGA) also complains about a worsening mood in foreign trade. “Our economic model is under massive pressure,” it says in a statement. The BGA expects exports from Germany to fall by 0.3 percent this year compared to last year. The Berlin-based association expects imports to fall by two percent. Among other things, the BGA calls for “the courage to pursue more free trade.”
Source: Stern
