Berlin (Reuters) – According to a study, the risk of a recession in Germany remains very high.
The probability of this in the period October to December is 73 percent, as the trade union-affiliated Institute for Macroeconomics and Economic Research (IMK) announced on Wednesday about its indicator. At the beginning of September it was even a little higher at 74.0 percent. The indicator, which works according to the traffic light system – which bundles data on the most important economic indicators – is still in “red”. This signals an “acute” risk of recession. Possible consequences of the Middle East war on economic development are not yet reflected in the data because they were collected before the attack on Israel.
“The German economy is still unable to swim free,” said IMK economic expert Peter Hohlfeld. “The fact that the probability of recession remains at a high level suggests that economic output will only increase slightly in the fourth quarter.” Many experts assume that the gross domestic product of Europe’s largest economy is likely to shrink in the second half of the year.
According to the information, the marginal decline in the risk of recession is due to the fact that incoming orders from home and abroad have recently increased significantly. The growth was particularly pronounced in intermediate and consumer goods. However, negative impulses from the financial markets prevented this positive trend from having a significant impact on the forecast. Share prices have fallen by almost four percent in the past few weeks. In addition, the European Central Bank’s interest rate increases made financing conditions for companies more difficult.
For the current year, the Düsseldorf researchers expect a decline in German economic output of 0.5 percent. The IMK is not expecting a strong upswing in the coming year either. The gross domestic product will then grow by 0.7 percent, according to the recently published forecast. This means that the IMK is significantly more pessimistic than it was assumed in the spring at 1.2 percent.
(Report by Rene Wagner, edited by Sabine Ehrhardt – If you have any questions, please contact our editorial team at [email protected])