Trade conflicts, hard Brexit, problems in emerging markets, the world economic climate is rough. The German economy is struggling but also with home-made problems. From Berlin, Sabine Kinkartz.
It is not good news that the leading German economic research institutes present in their autumn report. While the German gross domestic product is expected to grow this year by 1.7 percent, but the current forecast is significantly lower than in the spring, when the scientists of 2.2 percent. For 2019, a Plus of 1.9 instead of two per cent, advance is now being told, for 2020 of 1.8 percent.
“Recovery is losing momentum world economic climate is rough,” the economy have overwritten researchers their opinions. The title highlights the tension, in the Germany Institute, Roland Döhrn, who presented the report in Berlin with five other colleagues, stand, the economic chief of the Essen-based RWI. “Germany is in an upswing, is in his sixth year, but the risks become significantly larger. Risks dampen the recovery significantly, if not stop,” Döhrn.
Trade wars could trigger recession
Whether the international trade conflicts escalate, whether the financial problems in emerging-market countries, exacerbate, if the UK adopted a hard Brexit from the EU, or if in doubt as to the solidity of Italian public finances of the Euro crisis to flare up again – each event would have an impact on an open and export-oriented economy negatively, according to the researchers.
US President, Donald Trump heats up the trade war with China
In your opinion, you have created an invoice, in which the consequences of a trade war are simulated. “This has a dampening effect on the German economy in the short term of up to two percent,” calculates Döhrn. “Germany and Europe have so far remained of the of the U.S. outbound trade conflict largely spared”, as it is stated in the report. But: “An escalation of the trade conflict, which leads to significant increases in Customs duties of the United States on a broad Front can be expected in Germany and in Europe in a severe recession.”
Severe crises in Turkey and Argentina
In a global comparison, the report notes the large economic differences. In the USA, the tax cuts have caused a further upswing. In China, production increased significantly. Very much worse in the emerging countries. International investors have withdrawn, which has led to in Turkey and Argentina crisis proportions. In the Euro area, economic growth has lost momentum, particularly pronounced in France and in Italy.
The Turkish President Recep Tayyip Erdogan visited Germany, and also hopes for economic help
This has an overall negative effect on the German foreign transactions. While the demand from abroad wanes, the German economy, but also home-made problems. Embarrassing for the German car manufacturer: they afterwards came, with the changeover to the new exhaust test, the WLTP. Especially Volkswagen is concerned. The company has leased spaces for non-certified cars on the Berlin breakdown airport BER. Since the car industry in Germany has a large weight, the impact of these bottlenecks to continue until the end of this year, on the entire economic performance.
More jobs remain unfilled
Far more serious, but the shortage of skilled workers that is stifling, increasingly, the production, and will continue to worsen. “The evidence suggests that the labour market is becoming less and less able to satisfy the high demand for labour”, RWI-scientist Roland Döhrn. Already now the job market is empty, always more Vacancies remain longer vacant.
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Win-Win: refugees on the German labour market
The unemployment rate is expected to decrease by 5.2 per cent this year to 4.5 percent in 2020. The were still about two million people. Most of them do not meet the demands of the economy, above all in the qualification. Also, the decline in immigration from abroad, makes the opinion of the economic researchers have a negative impact. Overall, it is becoming less and less possible, “the aging-related decline in the labour force potential is to compensate”, – stated in the autumn report.
The effect on the wage development in Germany. “Due to the labour shortage, the wages are likely to rise more strongly,” concludes Döhrn, the forecast for the years 2019 and 2020, a similar salary, plus, as in this year, namely 2.7 percent. This will stimulate private consumption in Germany, which will be in the face of slowing overseas business to a more and more important pillar of the German economy.
German Chancellor Angela Merkel has made housing policy a matter for the boss
Harsh criticism of the Federal government
Similar to the German industry in the autumn report in Berlin’s ruling Grand coalition of CDU, CSU and SPD does not make good grades. The researchers are neither with the education and pension policy, with the Integration of refugees and the measures adopted for more housing to be satisfied.
The baukinder money, the families are to be encouraged to be a “straw fire” of the program, the meet a construction industry that was already more than busy. Therefore, the state funding will bring probably not a great incentive for new residential buildings and by price increases eat up. In addition, the subsidy is a gift to people with high income and assets – the needy could not afford a home in Germany, but also with the promotion.