German growth forecast downgraded

German growth forecast downgraded

The growth forecast for the German economy in 2016 has been downgraded to 1.6 percent, compared to a growth prediction of 1.8 percent last autumn, according to the latest data presented jointly by the German Federal Ministry for Economic Affairs in collaboration with a number of German economic thinktanks.

“Decisive for this adjustment was the fact that global economic growth has significantly slowed down. The German domestic economy on the other hand is today in an even better state compared to last autumn” explains Timo Wollmershäuser, head of the macroeconomic research department at the ifo Institute.

Consequently, the ifo Institute expects the number of people in employment to increase from 43 million in 2015 to 43.5 million in 2016. Unemployment levels are exected to increase slightly, from 6.2 percent to 6.4 percent, due to a time lag with the integration of refugees into the German labour market.

Moreover, the German budget surplus is expected to decline from €21bn to €11bn in 2016, due to additional investments as a result of the refugee crisis, nevertheless, the Ifo institute stresses that the German budget is in a healthy state and that there is still leverage for further investments.

The bi-annual economic forecast for Germany is producted jointly by the German Federal Ministry for Economic Affairs, the ifo Institute, the German Institute for Economic Research (DIW), the Halle Institute for Economic Research (IWH) and the Rhineland Palate Institute for Economic Research (RWI).

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