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Building materials and rubble on a construction site: the economy is not getting off the ground
Photo: Sven Hoppe / dpa
In the spring, economic researchers were still more optimistic – but now they expect a decline in economic output. The leading economic research institutes lowered their forecast for the development of gross domestic product by 0.9 percentage points to minus 0.6 percent compared to the spring estimate, they announced on Thursday. For next year, they expect an increase of 1.3 percent.
"The most important reason for this is that industry and private consumption are recovering more slowly than we expected in the spring," said Oliver Holtemöller, Deputy President at the Halle Institute for Economic Research (IWH).
The sharp rise in energy prices in 2022 has stalled the recovery from the corona pandemic, inflation is depriving households of purchasing power and the latest interest rate hikes are weighing on the construction industry, it added. The mood in companies has recently deteriorated again, and political uncertainty is also contributing to this.
For the coming year, the economic researchers lowered their forecast by only 0.2 percentage points to 1.3 percent. "Recently, wages have risen due to inflation, energy prices have fallen and exporters have partially passed on the higher costs, so that purchasing power is returning," the statement said. Accordingly, the downturn is likely to subside by the end of the year.
Economists expect unemployment to rise moderately to 2.6 million this year, with a slight decline forecast for 2024. An easing of the inflation rate is foreseeable. It is expected to be 6.1 percent this year and fall to 2024.2 percent in 6.
In addition to the IWH, the Ifo Institute, the Kiel Institute for the World Economy and the RWI-Leibniz Institute for Economic Research Essen are involved in the forecast.
mmq/Reuters/dpa