According to the Leibniz Institute for Economic Research Halle (IWH), the German economy is in a downturn. According to the institute’s autumn forecast, gross domestic product will fall by 0.5 percent this year, it said on Thursday. Other economic institutes such as the Ifo and the Kiel Institute for the World Economy also see an economic slowdown in Germany this year. For the coming year, the IWH expects GDP growth of 0.9 percent.
The head of economic activity at the IWH, Oliver Holtemöller, sees reasons for the downturn in several areas. Although private consumption is slowly stabilizing again after the energy price shock, the inflation rate remains high. Inflation is expected to remain above the European Central Bank’s (ECB) targets until 2025. As a result, private consumption will only recover slowly. In addition, housing construction has collapsed. In this area in particular, the prospects are bleak. Due to the situation in China, foreign trade is also stuttering, according to the Vice President of the IWH. The economies in China and Japan are currently weak and have not yet caught up despite the end of the pandemic. (dpa)