According to the Ifo Institute the German economy is in a downturn. In almost all branches of industry, the business climate will deteriorate. Also, the Federal government has become more pessimistic.
A steel worker of Salzgitter AG
For the mood swing concerns to the Ifo Institute, according to, among other things, the Brexit, the lock the U.S. budget and international Trade disputes such as the dispute between the United States and China. The Barometer for the business climate declined unexpectedly strong 1.9 to 99.1 points, as the Munich-based Institute said on Friday. “The German economy is in a downturn,” said Ifo President Clemens Fuest, the monthly survey of 9000 leaders. Recession, most experts do not expect, but also no clear trend for the Better.
“The business expectations, the number of pessimists outweighs for the first Time,” said Ifo economic climate expert, Klaus Wohlrabe at the launch of the business climate Index. For more than seven years, the optimists have had the upper hand. This to return now to the Negative. Already in December, the economy had reduced scientists from Munich its growth forecast for the German economy to 1.1 percent for 2019. “The current business climate Index confirms our growth forecast in December,” said Wohlrabe.
The Federal government is more pessimistic than the Institute
Other institutions such as the International monetary Fund and according to insiders, the Federal government also have taken their assessments. The Federal government should have halved their growth forecast for Europe’s largest economy. In the current year, it should extend only to an increase in the gross domestic product of 1.0 percent, such as from the draft of the annual economic report, to be presented next week. So far, Berlin was assumed to be 1.8 percent. The government is, therefore, more pessimistic than all the leading institutes. In 2020, it should be enough then to 1.6 percent. For comparison: in 2018, there had been an increase of 1.5 per cent in 2016 and 2017 amounted to the rate of growth of 2.2 per cent.
The business climate Index of the Ifo Institute, is considered an early indicator for the economic development in Germany. It is based on a monthly survey of German companies to their current economic situation. Accordingly, the mood in almost all the major sectors, and the clouds currently in the trade, as well as among the service providers in the construction industry and in the industry. “In all major industrial branches, except chemical industry, deterioration in the business climate,” said Ifo President Fuest.
Many experts see the government in view of the gloomy prospects under pressure. “You should take this to heart,” said the chief economist of VP Bank, Thomas Gitzel. “More important than tax cuts to the bureaucracy and investment in the fast Internet. Also the transport infrastructure worthy of a renewal.” At LBBW, the is seen in a similar way. “It is time that the policy represents your ability to act again, and the risks of accepting more,” said their chief economist Uwe Burkert. “Otherwise, we will feel the consequences in the real economy soon.”
djo/as/zdh (afp, rtr)