According to the International Monetary Fund (IMF), the German economy will shrink by 0.5 percent this year. The IMF has thus revised its forecast downwards again, as can be seen from the IMF estimate for the global economy published on Tuesday. In July, the IMF predicted a decline in economic output in Germany of 0.3 percent. In the coming year, however, the German economy is expected to grow again – by 0.9 percent. However, that is still 0.4 percentage points less than assumed in July. In 2022, the German economy grew by 1.8 percent.
The fund cites the weakness of interest-sensitive sectors, lower demand from trading partners and consequently a weakness in industrial production as reasons. The federal government is also expecting a slight recession this year in view of inflation and the weakening global economy. A decline in economic output of 0.4 percent compared to the previous year is expected, government circles said at the end of last week.
At the same time, the global economy is only recovering slowly from the consequences of the corona pandemic, the Russian war against Ukraine and high inflation – growth is historically weak. IMF chief economist Pierre-Olivier Gourinchas warns: “The global economy is limping along, it is not sprinting.” The growth forecast for the global economy for this year is 3.0 percent, as in July. For the coming year, the fund revised its estimate slightly downwards to 2.9 percent (minus 0.1 percentage points). Last year the global economy grew by 3.5 percent. Looking back, the resilience of the global economy is remarkable in view of the various crises, according to the IMF.
Although growth has slowed, it has not come to a standstill. Nevertheless, it is uneven worldwide, according to IMF chief economist Gourinchas. The slowdown is therefore more pronounced in industrialized nations than in poorer countries. A full recovery towards pre-pandemic trends appears increasingly out of reach. In addition to the consequences of the pandemic and the war in Ukraine, growth will be slowed by the strict monetary policy due to high inflation and extreme weather events, according to the IMF. (dpa)