The forecasts for the German economy are currently quite gloomy. Economists are based on specific data: on company orders, on consumer sentiment, on the situation with the export of goods and on the expectations of company managers, explains ARD.
Banking analyst Gertrud Traud told the German public-law media the following: “There has been no growth for two years now, and if we look at the details, we see that only government consumption is growing. The private components are not developing, and the mood among consumers and companies is accordingly bad“.
Germany remains the "sick man" of Europe
This is reflected in the forecasts. The Institute for German Economics predicts that the German economy will continue to stagnate this year, growing by just 0.1 percent. The forecast of the Organization for Economic Cooperation and Development (OECD) in Europe is more optimistic - for a plus of 0.7 percent. But even if it is achieved, Germany will remain at the bottom of the list of developed industrial countries.
From an economic point of view, Germany remains the “sick man” of Europe, economist Carsten Brzeski told ARD: “The year will be marked by trade wars, by trade tensions, by the fact that the US economy will become significantly more attractive, so that a number of German companies will increasingly orient themselves towards the US. There is still a war in Europe. And in Germany there is no regular government.“
The new government and consumption as an economic engine?
Despite the bad situation, there is hope that after the parliamentary elections at the end of February the economy will start to pick up again. “The hope remains that the situation will improve over the course of the year with the new federal government – thanks to an investment package combined with structural reforms. And in the second half of the year the German economy could pick up again“, Brzeski told ARD.
There is also hope for the economy in terms of consumption. Inflation has fallen and wages have increased somewhat significantly. However, the president of the Munich-based ifo institute, Clemens Fust, emphasizes that households are still saving – out of concern for the future. “However, I think that some of their income will still flow into consumption and that could support the economy.“
Opportunities and uncertainty in exports
Fust believes that exports will remain a strong point of the German economy. “In certain export markets it will become more difficult - such as in China and possibly in the USA. But that only means that other export markets have to be sought. We have to make sure that the European internal market is not forgotten - there are still too many obstacles there, especially in the service sector. So there are also opportunities there that we should use.“
So it turns out that the fate of the German economy also depends on global developments. Above all, Donald Trump as the new US president will play a decisive role.
What if everything is completely different?
The fears are great. But something completely different could also happen, bank analyst Gertrud Traud told ARD. “Perhaps countries and international organizations will start to cooperate better again. Geopolitical tensions may decrease and planning certainty will increase. Technological progress could also be added to this, which would lead to an increase in productivity on a global scale.“
For the German economy, it would mean a lot that growth would at best reach one percent, which would dispel the dark clouds on the horizon, the German public-law media summarizes.
Author: Sebastian Schreiber ARD