Economic researcher: Ifo Institute lowers economic forecast

The Ifo economists are concerned about the strength of the upturn: the trade dispute and plans of the new Italian government could slow down growth.

Economic researcher: Ifo Institute lowers economic forecast

Because of trade dispute with USA, economists are increasingly seeing greater risks to economic development. The Ifo institute in Munich estimates outlook for German economy considerably more pessimistic than it did in spring: Munich researchers lowered ir forecast for growth of gross domestic product (GDP) this year from 2.6 to 1.8 percent. As a statement, Ifo business manager Timo Wollmershäuser said: "The economy has developed significantly worse than expected in first months of year."

Meanwhile, companies also invested less, said Wollmershäuser. There is also a threat of a new euro crisis. AlsBrandherd can prove itself above all Italy, where NeueRegierung wants to spend more money despite high indebtedness. " The downside risks for German economy have increased sichdeutlich, "Wollmershäuser said. "Sieüberwiegen by far." This year's exports are no longer as kräftigzulegen as in past, as are private consumption and dieInvestitionen.

"However, we believe that DeutscheAufschwung continues, albeit not at same tempo wie2017," added Wollmershäuser. The number of unemployed, for example, is expected to continue to decline and 2019 with 2.2 million by around 300,000 lower than 2017. For 2019, researchers lowered ir forecast for GDP growth from 2.1 to also 1.8 percent.

The surplus of state is expected to be 38 billion euros each in both forecast years. The much-criticized surplus in current account – that is, difference between exports of goods and services – is expected to amount to 267 billion euros this year, which is equivalent to 7.9% of GDP. According to Ifo forecast, current-account surplus of 2019 reached a level of 268 billion euros, which would be 7.6% of GDP. The EU Commission already considers values of six Prozentals of stability to be dangerous.

The Essen RWI Leibniz Institute for Economic Research is also more sceptical with regard to economic growth. It lowered its forecast for current year from 2.4 to 1.8 percent; For 2019, RWI researchers expect a GDP increase of 1.5 percent instead of 1.9 percent so far. Previously, Berlin DIW and IWH Inhall had already strongly adjusted ir expectations downwards.

"The foreign economic climate has become harsher," explained RWI chief economist Roland Döhrn. "Only small parts of German exports are affected by VerhängtenZöllen by USA," says Döhrn. He fears, however, that " germination of protectionism" has a negative effect on export climate "and companies Vorsichtigeragieren". US President Donald Trump has imposed punitive duties on aluminium and steel from EU Länderneingeführt, next, which could be followed by cars.

Date Of Update: 20 June 2018, 12:02

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