Ifo Economic Forecast 2003: Only hesitant recovery

On 19 December the Ifo Institute presented its forecast for 2003 at its pre-Christmas press conference. The expansion of aggregate production will come to a near standstill in the first quarter of 2003. In the further course of the year can we expect a gradual recovery. Real GDP will grow by only around 1.1%. Consumer prices will remain nearly stable in the forecast period; the inflation rate will again amount to 1.3% in 2003. The low point on the labour market in Germany has not yet been reached. Employment will fall up to mid-2003, and the number of unemployed could average 4.22 million for the year. The unemployment rate will thus stand at 9.9%. The budget deficit will decrease in 2003 to €60 billion (2.8% of GDP).