German Economic Output to Shrink Again in the First Quarter
The ifo Institute expects Germany’s economic output to shrink in the first quarter of 2024. “According to our current ifoCAST estimate, gross domestic product is likely to contract by a further 0.2 percent,” says Timo Wollmershäuser, Head of Forecasts at ifo. “This would tip the German economy into recession. Companies in almost all sectors of the economy are complaining about falling demand. In manufacturing and construction, the sizable order backlogs that companies had built up during the coronavirus pandemic have now melted away. Incoming orders have been declining for many months, and a wave of cancellations has swept across the country, particularly in residential construction. It appears that restrictive monetary policy in Europe and North America, with its aim of stabilizing prices through sharp rises in key interest rates, is now taking full effect.”
Wollmershäuser adds: “Furthermore, a number of special factors are weighing on the German economy. These include high illness levels, rail strikes at Deutsche Bahn, and an unusually cold and snowy January.”
ifoCAST
ifoCAST generates forecasts of current German GDP with the help of a statistical model that works with historical correlations. These forecasts do not necessarily have to correspond to the published ifo Economic Forecasts, which also take expert knowledge into account.
ifoCAST Forecast
Bi-monthly, ifoCAST presents an assessment of the development of Germany’s current GDP growth and highlights changes in the forecast against the background of new information.
