Economic growth
Ifo lowers the economic forecast – also because of Trump
The Munich economic researchers complain of weak demand, competitive pressure and political uncertainty. But it could also be much better than predicted now.
The IFO Institute has reduced its forecast for the development of the German economy in the current year for growth of 0.2 percent. In winter, the Munich economic researchers still assumed an increase of 0.4 percent. It was not until 2026 that the IFO experts see a little more potential again with 0.8 percent. All values relate to the price -adjusted gross domestic product.
“The German economy is stuck. Despite a recovering purchasing power, the consumer mood remains, and companies also invest cautiously,” said the head of the IFO economy forecasts, Timo Wollmershäuser. In particular, industry suffers from weak demand and increasing international competitive pressure.
However, the current forecast does not yet include the current plans of the expected future government, as Wollmerhäuser explained. On the one hand, these have not yet been decided, on the other hand, one does not know enough about the exact design. However, if they are implemented well, there are clear potential. Above all, the coming, possibly also this year, the growth could then be higher than is currently predicted.
Union and SPD had agreed several changes in the basic law with the Greens. On the one hand, the goal is to relax the debt brake to enable higher defense spending. On the other hand, a special fund, which is 500 billion euros, financed by debts, is anchored for investments in infrastructure and climate neutrality in the Basic Law.
In December, the IFO also called an alternative scenario in its forecast, which in the event of the right political course for 2025 had predicted growth of 1.1 percent and for 2026 of 1.6 percent.
“Erratic and Protectionist Economic Policy” of the United States
But it could also come worse: political uncertainties, both in Germany and in the United States, caused considerable risks, the IFO said. “The new US government has taken on an erratic and protectionist economic policy. Already announced import duties on goods from Mexico, Canada and China as well as corresponding counter-tariffs have the first negative effects on the US economy and the global economy. If there are also European products, the German export industry could be sensitive.”
Wollmerhäuser called on politics to quickly overcome this phase of uncertainty. “A reliable economic policy is essential to create trust and boost investments,” he emphasized. “The companies need planning security, especially in view of the current challenges through structural change in industry.”
Inflation expected at 2.3 percent.
The IFO expects the unemployment rate for the current year to 6.2 percent. This is minimally worse than in the last forecast. 6.0 percent are predicted for 2026.
In inflation, the Munich economic researchers – as in winter – assume 2.3 percent in the current year and 2.0 percent in the coming year.
dpa
Source: Stern
