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IW-Forschungsgruppe Konjunktur IW-Trends No. 2 25. June 2012 Upturn in a Volatile Environment

IW Economic Forecast, Spring 2012

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Upturn in a Volatile Environment
IW-Forschungsgruppe Konjunktur IW-Trends No. 2 25. June 2012

Upturn in a Volatile Environment

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IW Economic Forecast, Spring 2012

After the stagnation of the last quarter of 2011 and the first quarter of 2012 the German economy is back on course for growth. The global economic outlook, which last year worsened noticeably as a result of the potentially adverse effects of the sovereign debt crisis, has brightened again. This will benefit German foreign trade but too late to make a positive contribution to the economy in the course of the forecast period. Private consumption and domestic investment activity will drive growth. While price developments will significantly weaken the increase in consumer spending, the sustained positive development in the labour market will lead to an annual 1 per cent expansion in private consumption in each of the years 2012 and 2013. Annual average unemployment will fall in 2012 to 2.6 million, with the number of employed hitting a record level of just under 42 million. The recovery in the economy will contribute to a reduction in the government budget deficit to 1 per cent of GDP in 2012 and only ½ per cent next year. However, this is no reason to ease up on efforts at consolidation.

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Upturn in a Volatile Environment
IW-Forschungsgruppe Konjunktur IW-Trends No. 2 25. June 2012

Upturn in a Volatile Environment

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