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IW Research Group Macroeconomic Analysis and Forecast IW-Trends 3. December 2018 IW Economic Forecast and Business Survey Autumn 2018: Weak Growth with a Stiffening Headwind

The German economy contracted in the third quarter of 2018 as temporary dips in new registrations caused a decline in production in the automotive sector. Although some of this lost ground will be made up later, economic growth for the year as a whole will be a meagre 1.5 per cent.

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Weak Growth with a Stiffening Headwind
IW Research Group Macroeconomic Analysis and Forecast IW-Trends 3. December 2018

IW Economic Forecast and Business Survey Autumn 2018: Weak Growth with a Stiffening Headwind

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The German economy contracted in the third quarter of 2018 as temporary dips in new registrations caused a decline in production in the automotive sector. Although some of this lost ground will be made up later, economic growth for the year as a whole will be a meagre 1.5 per cent.

A further factor in this deceleration is the slowing momentum of the global economy. American protectionism, the slowdown in emerging markets and uncertainties stemming from an imminent Brexit and the new Italian government are weighing on corporate expectations. The regular survey of German business conducted by the German Economic Institute (IW) comes to similar conclusions. The prospects for production, export, investment and employment in Germany have all deteriorated noticeably in the course of 2018. While by no means stagnating, at a mere 1.2 per cent the German economy is expected to enjoy only very modest growth in 2019. These dampened expectations are reflected in the labour market. Employment will continue to rise and unemployment to fall, but the movements will become more leisurely. Despite these signs of an economic slowdown, the public budget will remain in surplus next year, but at only half its current rate. While tax revenues are growing more slowly on the revenue side, government spending, especially social expenditure, will continue its steep rise.

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Weak Growth with a Stiffening Headwind
IW Research Group Macroeconomic Analysis and Forecast IW-Trends 3. December 2018

IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur: Schwaches Wachstum bei auffrischendem Gegenwind – Prognose und IW-Konjunkturumfrage Herbst 2018

IW-Trends

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IW Research Group Macroeconomic Analysis and Forecast IW-Trends 3. December 2018

IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur: Schwaches Wachstum bei auffrischendem Gegenwind – Prognose und IW-Konjunkturumfrage Herbst 2018

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