COLOGNE (dpa-AFX) – High interest rates, more expensive energy and weak exports are crippling the German economy. The German Economic Institute (IW) is therefore expecting real gross domestic product (GDP) to fall by up to 0.5 percent this year, according to the economic report that has now been published.
Due to its high focus on world markets and its high export quota, the German economy is suffering disproportionately from geoeconomic shocks such as the Ukraine war and the tensions in relations with China, the scientists write. With its high proportion of industry in an international comparison and the importance of energy-intensive industries, it is also feeling the effects of the existing supply risks and cost shocks more than other countries. At the same time, domestic demand is suffering from high inflation. Private consumption will slow down the economy.
The IW experts predicted that economic output at the end of 2023 would only be at the level of the end of 2019. For the 3rd and 4th quarters of 2023, they expect a decline in economic output.
On average for 2023, the employer-oriented institute expects 2.58 million unemployed, 160,000 more than in the previous year. The unemployment rate will rise to a good 5.5 percent. Although no major redundancies are to be feared, the unemployed are having increasing difficulties finding new employment. According to the experts, the inflation rate in 2023 should be only slightly below the previous year’s level at 6.5 percent./rea/DP/jsl