Ifo lowers Germany’s growth forecast
The Institute for Economic Research (Ifo), one of Germany’s leading economic think tanks, revised down its growth forecast for this year due to the negative impact of high inflation on consumer spending.
Ifo, based in Munich, updated its growth forecasts for the German economy for 2023-2024, which it shared in March.
Ifo lowered its Gross Domestic Product (GDP) growth forecast for this year from minus 0.1 percent to minus 0.4 percent and its growth forecast for 2024 from 1.7 percent to 1.5 percent. .
Ifo expects inflation, which was 6.9 percent last year and 6.1 percent in May, to average 5.8 percent this year and decline to 2.1 percent in 2023.
THE NUMBER OF UNEMPLOYMENTS IS ESTIMATED AT 2.55 MILLION
In the Ifo report, which states that private consumption will decline by 1.7 percent this year due to unusually high inflation, private consumption is forecast to rise by 2.2 percent in 2024.
The report forecast that the number of unemployed in the country will increase slightly from 2.42 million to 2.55 million this year compared to last year, and fall again to 2.45 million next year.
It was indicated that the unemployment rate will be 5.3 percent in 2023 and 5.5 percent in 2024.
It is also estimated that the number of people employed will increase from 45.57 million to 45.95 million this year and to 46.07 million in 2024.
It is estimated that the number of employed people will go from 45 million 572 thousand this year to 45 million 949 thousand, and next year to 46 million 70 thousand.
THE BUDGET DEFICIT IS EXPECTED TO DECREASE TO 27.2 BILLION EUROS
Ifo expects the German public sector budget deficit to decrease from 106 billion euros last year to 68.9 billion euros this year and 27.2 billion euros next year.
The country’s current account surplus, which was 145 billion euros last year, is expected to rise to 232 billion euros this year.
Said surplus is expected to reach 269,000 million euros in 2024.
“The German economy is recovering very slowly from the effects of the recession,” said Timo Wollmershaeuser, Manager of Business Cycle Research and Economic Forecasting at Ifo. saying.
The Hans Böckler Foundation-affiliated Institute for Macroeconomics and Business Cycle Studies (IMK) also forecast on Wednesday that the German economy will contract by 0.5 percent this year, possibly staying out of recession. He predicted growth of 1.2 percent next year.
THE ECONOMY IS IN RECESSION
The German economy had technically entered a recession, contracting 0.3 percent in the first quarter of this year due to the impact of unusually high inflation and rising interest rates on consumer spending.
The economy contracted 0.5 percent in the last quarter of last year.
Although the bottlenecks that arose during the Covid-19 epidemic have eased, the country’s economy is negatively affected by the stagnation of demand due to the rise in interest rates, the decrease in confidence in the economy and the decrease in consumer purchasing power. in an environment of unusually high inflation.
The German government expects 0.4 percent growth in the economy this year. (AA)