ifo President Clemens Fuest has praised the interest rate increase by the European Central Bank (ECB). “The reasoning behind the ECB’s interest rate hike is sound. Inflation remains high despite the economic slowdown. The ECB has raised its inflation forecast for 2024, and against this backdrop an interest rate increase is logical,” he said in Munich on Thursday.
Sales at eating places in major German cities have recovered, despite many crises in recent years. In the five metropolitan regions considered, sales at eating places are currently well above pre-Covid pandemic levels, even if adjusted for inflation. This is the result of a new study by the ifo Institute and the Technical University of Munich for the metropolitan areas of Berlin, Hamburg, Munich, Stuttgart, and Dresden. “There is an upswing in the food service industry after the Covid pandemic, despite the war in Ukraine and high inflation,” says ifo expert Simon Krause, co-author of the study. “The importance of eating places for many people is reflected in the fact that many restaurants in large cities are once again well attended.”
L’Institut ifo vient de confirmer ses prévisions pour 2023 : la performance économique de l'Allemagne reculera de 0,4 %. L’année suivante, elle enregistrera une croissance de 1,4 %, alors que les économistes avaient tablé jusqu’à présent sur 1,5 %. Les prévisions pour 2025 sont de 1,2 %. « La reprise attendue pour le deuxième semestre ne viendra finalement pas, bien au contraire : le ralentissement continue et l’ambiance est morose dans presque tous les secteurs », constate Timo Wollmershäuser, directeur des enquêtes conjoncturelles de l’Institut ifo.
Price-adjusted gross domestic product will decline by 0.4% this year. In the next two years, economic output is expected to increase by 1.4% and 1.2%. The inflation rate will fall further from an average of 6.0% this year to 2.6% next year and 1.9% the year after.
The ifo Institute has confirmed its forecast for Germany in 2023: economic output is set to shrink by 0.4 percent. It will then rise next year by 1.4 percent – 0.1 percentage points less than previously thought. In 2025, growth is predicted to reach 1.2 percent. “Contrary to expectations so far, the recovery will probably fail to materialize in the second half of the year. The slowdown is continuing, and this trend is seen across almost all industries,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Inflation in Germany is likely to fall further. German companies’ price expectations for the coming months have declined somewhat, according to the ifo Institute’s Business Survey. They fell to 14.7 points in August, down from 16.3* points in July. “However, the decline in inflation will be a long, hard road,” says Timo Wollmershäuser, Head of Forecasts at ifo. Among retailers, for example, the balance of price expectations fell only from 34.9* to 33.5 points; in hospitality, from 47.8* to 46.6 points; and in the food and beverage trade, from 55.3* to 55.1 points.
Inflation in Germany is likely to fall further. German companies’ price expectations for the coming months have declined somewhat, according to the ifo Institute’s Business Survey. They fell to 14.7 points in August, down from 16.3* points in July. “However, the decline in inflation will be a long, hard road,” says Timo Wollmershäuser, Head of Forecasts at ifo. Among retailers, for example, the balance of price expectations fell only from 34.9* to 33.5 points; in hospitality, from 47.8* to 46.6 points; and in the food and beverage trade, from 55.3* to 55.1 points.
Fewer German retailers are affected by supply problems. The figure fell to 36.6% in July, down from 40.4% in June, finds the latest ifo Institute survey. Compared with the previous year, this proportion has roughly halved. “Despite more stable supply chains, the business environment remains tense for many retailers,” says ifo expert Patrick Höppner. “At the same time, the current period of economic weakness, combined with continued high inflation, is weighing on demand.”
In food and beverage retail, many companies remain affected by supply problems: 69.9% of businesses reported this in July, down from 79.7% in June. Among car dealerships, the figure was 53.4%; in June, this figure was 60.9%. In clothing, toy, and furniture retail, only just under 20.0% of businesses were affected.
Germany's inflation peaked in October 2022, surpassing 10% for the first time in decades. In our podcast, we discuss the credibility of central banks, effective measures to protect citizens from inflation, and the long-term consequences of rising prices. Our guest is Timo Wollmershäuser, ifo's expert in monetary policy.
En 2022, l’inflation en Allemagne a été principalement stimulée par la hausse des prix des intrants. 5,7 points de pourcentage de la hausse globale des prix des biens de consommation produits en Allemagne, qui a atteint 8,3 %, sont imputables à l’augmentation du coût des produits primaires, de l’énergie et de nombreuses matières premières. Ce constat est le résultat de calculs réalisés par l’Institut ifo. L’augmentation des bénéfices, qui contribue à hauteur de 1,4 point de pourcentage, est le deuxième facteur de cette hausse des prix. « L’année dernière, certaines entreprises ont pu augmenter leurs marges bénéficiaires en raison de la forte demande dans de nombreux secteurs de consommation », explique Timo Wollmershäuser, directeur des enquêtes conjoncturelles de l’Institut ifo. En revanche, la hausse des salaires n’a contribué qu’à hauteur de 0,6 point de pourcentage à la hausse des prix. « On ne constate pas jusqu’à présent l’apparition d’une spirale inflationniste des prix et des salaires », poursuit-il.
In 2022, inflation in Germany was attributable mainly to higher input costs. Price increases for intermediate products, energy, and a large number of raw materials explain 5.7 percentage points of the 8.3% rise in the price of consumer goods produced in Germany. The second most important price driver, contributing 1.4 percentage points to inflation, was increased profits. “Some companies were able to expand their profit margins last year due to strong demand in many consumer-driven sectors,” says Timo Wollmershäuser, Head of Forecasts at ifo. Rising wages, meanwhile, contributed only 0.6 percentage points to inflation. “A wage-price spiral has so far failed to materialize,” Wollmershäuser adds.
Economic experts are expecting real estate prices worldwide to climb steeply in the years ahead. This is the finding of the latest Economic Experts Survey (EES), which is conducted quarterly by the ifo Institute and the Swiss Economic Policy Institute. According to the survey, real estate prices will increase by an average of 9 percent annually over the next ten years. The experts predict increases of 8.4 percent in the UK, 6.0 percent in the US, and 5.5 percent in France. “The increase in real estate prices is being driven more by factors of demand rather than supply,” says ifo researcher Timo Wochner.