Business General News

German economists unanimously predict recession in the country

German economic institutes and leading economists warn of the threat of recession in the German economy, as indicated, among other things, by a reduction in industrial production in the country.

According to the German Institute for Macroeconomics and Market Research (IMK), the probability of a recession in the German economy is already 59.4% compared with 43% in August. This is the highest figure from 2012-13.

IMK emphasizes the presence of an “acute threat of recession,” which is due to a reduction in industrial production and the number of orders in manufacturing sectors, a decrease in the number of vacancies in the labor market and a “depressed mood in the economy”, primarily due to foreign economic risks associated with the threat of a “hard option” “Brexit and the trade wars.

IMK noted a number of poor progress in the automotive industry and some other industries.

In turn, the Munich Institute for Economic Research (IFO) predicts a decline in German GDP in the III quarter by 0.1%. Given a 0.1% decline in April-June, this means a recession. The forecast for economic growth for 2019 has worsened from 0.6% to 0.5%.

“Industry weakness spreads like an oil slick to other industries,” said IFO expert Timo Wolmershäuser. A weak economy is already affecting the labor market.

August was the fourth consecutive month when the number of unemployed did not decrease in Germany, that is, employment is not growing.

For its part, the Institute for the World Economy in Kiel (IfW) also predicts a recession in the German economy in the III quarter, expecting a decline in GDP by 0.3%.

The Federal Statistical Agency will publish on November 14 preliminary data on changes in German GDP in the III quarter, final data on November 22.