Economy
Special funds and moods: German descent soon?
Even after two years of recession, OECD Germany’s growth for this year estimates as deep as in hardly any other country. But an end to the crisis seems in sight.
The German economy does not really get off the spot because of expensive energy and the customs dispute with US President Donald Trump – but improvement is in sight. While smoldering customs conflicts prevent companies from investing, consumers grow deeper again after the years of inflation. And crank up the economy so soon.
These are the results of the new economic outlook, which the Organization for Economic Cooperation and Development (OECD) presented in Paris. Is the German economy ahead of the turnaround?
Maue’s growth: Hardly any country is worse
Commercial conflicts, expensive energy and other hardships leave the German economy to breathe for the time being. The OECD leaves its forecast in mini growth of 0.4 percent. Only Austria and Norway do worse under the 54 examined economic areas.
In the past few months, trade barriers and associated uncertainties have increased drastically, said OECD chef economist Álvaro Pereira. “The weaker economic outlets will be felt almost without exception all over the world.”
Particularly striking: the OECD forecast is still comparatively rosy. Both the EU Commission and the Germans “economy” recently put together their prospects for growth. They expect only a stagnation of economic power for this year.
The Institute for Macroeconomics and Economic Research at the Hans Böckler Foundation even forecast the third year of recession in March. It would be a novelty in the history of the Federal Republic.
Consumer’s mood is boosting the economy
The situation is different for the coming year: Here, the experts of the OECD expect 1.1 percent of 1.2 percent growth – they trust the German economy as much as “Economic” and the EU Commission. Among other things, the increase goes back to the planned billions of investments by the federal government. They were not yet fully taken into account in the past OECD forecast.
According to OECD, consumers themselves provide important impulses, whose consumer mood should attract again after the years of inflation. Germany has been suffering from weak consumption for years. Consumers keep their money together because the prices significantly attracted due to the Ukraine War. But although the inflation normalized again and wages rose, private consumption did not get going – according to the OECD, this will change.
Danger for consumers – does inflation start again?
Private consumption is supported by higher government expenditure, especially because of the new debt rules. Against this background, the OECD experts warn of a strengthening inflation: In combination with the shortage of skilled workers, the increasing demand could fire prices. The recruiting of qualified workers from abroad must therefore be a priority.
The German economy in particular also remains particularly vulnerable to escalations in the customs dispute, according to the OECD. According to this, around 10 percent of the goods carried out go to the United States. For this reason, the OECD’s numbers should also be enjoyed with caution. Depending on the outcome of the negotiations, growth could be significantly worse or better.
Is the trend reversal in sight?
Better prospects in the coming year often presupposes that the trade conflicts are largely settled this year and that the situation then normalizes, says Michael Grömling, boss at the Institute of the German Economy (IW). “This is a huge assumption if you look at the erratic policy of the US President.”
Even the planned investments by the federal government could not solve the problem alone. “The question is whether public investments also trigger investments from companies – or that keep back.”
dpa
Source: Stern
