Descending Economic Expectations: IW Economic Forecast Autumn 2018

The subdued global environment has slowed down exports and industrial production in Germany as well, significantly reducing expectations for them in the 2018 and 2019 forecast period. As a result, investment activity in Germany is also losing momentum. On the other hand, persistently robust private and public consumption are keeping the risk of stagnation at bay. Never­theless, the slight slowdown in the labour market and a steeper rise in consumer prices are making themselves felt. While real gross domestic product is expected to grow by 1.8 per cent in 2018, next year economic growth will amount to only 1.4 per cent. This is enough to keep unemployment falling. With lower interest obligations and employment-driven revenue growth, the public sector budget will continue untroubled.