The Ifo Institute expects a decline in German economic output of 0.4 percent, inflation of 6.0 percent and almost 2.6 million unemployed this year. “Unlike what was previously expected, the recovery is unlikely to occur in the second half of the year,” said Ifo economics chief Timo Wollmershäuser on Thursday in Berlin: “The slowdown is continuing, and the trend is towards a slump in almost all sectors.”
In their autumn forecast, the Munich economic researchers are somewhat more pessimistic than they were in June with regard to inflation and unemployment for both this year and next. They only confirmed their economic forecast for the current year: “According to this, German economic output will shrink by 0.4 percent. Next year it will then rise by 1.4 percent, 0.1 percentage points less than previously thought.”
One ray of hope is private consumption: it is likely to recover gradually. “The increase in disposable household income will remain strong and, with inflation rates slowly falling, will also lead to an increase in purchasing power,” said Wollmershäuser. The Ifo Institute expects consumer prices to rise by 2.6 percent next year. The number of unemployed is likely to be just under 2.6 million next year. The state’s financing gap will only decrease slowly, from 92 billion euros this year to 80 billion euros next year. (dpa)