Prof. Dr. Timo Wollmershäuser

Deutschlands Wirtschaftswachstum schneidet im Ländervergleich erwiesenermaßen schlecht ab. Timo Wollmershäuser erklärt eine Reihe von besonderen Faktoren, die sich zusätzlich negativ auf die aktuelle konjunkturelle Lage auswirken.

Timo Wollmershäuser erläutert, warum das deutsche Bruttoinlandsprodukt trotz Energie-Krise und Ukraine-Krieg leicht gewachsen ist und die Deutschen dennoch weniger Einkommen zur Verfügung haben.

Timo Wollmershäuser erläutert, durch welche Einflussfaktoren die wirtschaftliche Erholung der deutschen Industrie von der Coronakrise gehemmt wird und welche Entwicklung sich für das kommende Jahr abzeichnet.

Clemens Fuest und Timo Wollmershäuser

Clemens Fuest, Timo Wollmershäuser

ifo price expectations in Germany fell to 14.3 points in March, down from 15.0 points in February. This is their lowest level since March 2021. “Inflation is still on the decline and should fall below 2% this summer. From a German perspective, there’s no reason why the ECB shouldn’t cut interest rates soon,” says Timo Wollmershäuser, Head of Forecasts at ifo.

According to Germany’s five leading economic research institutes, the country’s economy shows cyclical and structural weaknesses. In their spring report, they revised their GDP forecast for the current year significantly downward to 0.1%. In the recent fall report, the figure was still 1.3%. Expectations for the coming year are almost unchanged at 1.4% (previously 1.5%). However, the level of economic activity will then be over 30 billion euros lower due to the current weak phase.

L’institut Ifo vient de réduire ses prévisions de croissance pour 2024 à 0,2 %, alors qu’il tablait encore sur 0,7 % en janvier et 0,9 % en décembre. Pour 2025, il relève toutefois ses estimations à 1,5 %, soit une hausse de 0,2 point. « La réticence des consommateurs, les taux d’intérêt élevés, la hausse des prix, les mesures d’austérité prises par le gouvernement et la faiblesse de la conjoncture mondiale freinent la croissance économique de l’Allemagne et provoquent une nouvelle récession hivernale. La disparition progressive de la pression sur les taux d’intérêt et sur les prix et les effets de la hausse du pouvoir d’achat des consommateurs devraient entraîner une amélioration des performances économiques à partir du milieu de l’année », explique Timo Wollmershäuser, directeur des enquêtes conjoncturelles de l’Institut ifo.

The ifo Institute has reduced its growth forecast for the current year to 0.2%, down from 0.7% in January and 0.9% in December. But for next year, it raised its growth estimate by 0.2 percentage points to 1.5%. “Consumer restraint, high interest rates and price hikes, the government’s austerity measures, and the weak global economy are currently dampening the economy in Germany and leading to another winter recession. Economic output will accelerate toward the middle of the year as interest rate and price burdens gradually disappear and consumers’ purchasing power increases,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Fewer companies in Germany are looking to raise their prices. In February, the ifo price expectations slipped to 15.0 points, down from 18.8 points* in January. This was mainly due to the consumer-related sectors, where price expectations fell from 32.4 points* to 28.9 points. “This suggests that in the coming months, inflation will continue to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.

More of Germany’s consumer-related companies are planning to raise their prices. The ifo price expectations for these industries rose from 32.3 points* in December to 32.9 points in January. Price expectations increased noticeably among consumer-related service providers in particular, from 37.3 points* to 42.1 points. In retail, by contrast, the proportion of companies planning price increases declined; the balance there fell from 30.0 points* to 28.6 points. “This suggests that in the coming months, inflation will subside, but only slowly,” says Timo Wollmershäuser, Head of Forecasts at ifo.

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.

L’Institut ifo a revu à la baisse ses prévisions de croissance pour 2024 à 0,7 %, alors qu’il prévoyait encore une croissance de 0,9 % à la mi-décembre. « Nous estimons que le budget fédéral récemment approuvé par la commission budgétaire prévoit des économies supplémentaires de près de 19 milliards d’euros », explique Timo Wollmershäuser, directeur des enquêtes conjoncturelles de l’Institut ifo. « Les entreprises et les ménages font face à une hausse ou à une moindre baisse des charges, qui s'accompagne d’une réduction des dépenses publiques. Le montant global est donc proche des prévisions que nous avions établies en décembre dans le cadre de notre analyse des risques pour 2024. Les conséquences pour l’économie devraient être du même ordre de grandeur. »

The ifo Institute has cut its growth forecast for Germany in 2024 to 0.7%, down from the 0.9% it had predicted in mid-December. “Now that the German parliament’s budget committee has agreed on the federal budget, we estimate that it passed additional savings of just under EUR 19 billion,” says Timo Wollmershäuser, Head of Forecasts at ifo.

The proportion of companies in Germany that want to raise their prices in the coming months is increasing again. The ifo price expectations rose to 19.7 points in December, up from 18.1 points* in November. Price expectations reached their temporary low in August 2023 at a balance of 14.5 points. “This means the decline in inflation rates is likely to stall for the time being,” says Timo Wollmershäuser, Head of Forecasts at ifo.

The ifo Institute has cut its forecast for German economic growth in 2024 from 1.4 percent to 0.9 percent. For 2025, it expects a slight acceleration to 1.3 percent; ifo had previously expected growth of 1.2 percent. “The last quarter of 2023 is likely to see weaker development than previously expected, which will then also have an impact on the year ahead,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Slightly more companies in Germany are planning to raise their prices. The price plans index rose to 18.0 points in November, up from 15.4 points* in October. This is primarily due to business-related service providers and wholesalers, where the balance value climbed from 21.5 points* to 28.3 points. In consumer-related sectors, however, price expectations continued to fall. Among food retailers, the balance fell from 40.7 points* to 34.2 points; among other retailers, from 28.2 points* to 27.7 points; and among consumer-related service providers, from 29.3 points* to 25.5 points. “That means inflation is continuing to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.

In Germany, fewer companies are expecting prices to rise in the months ahead. Price expectations fell to 15.3 points in October, down from 15.7 points* in September. The most noticeable drop was in consumer-related industries. Among food retailers, the balance fell from 53.0 points* to 41.6 points, among other retailers from 31.8 points* to 28.3 points, and among consumer-related service providers from 35.1 points* to 29.3 points. “This means that consumer prices will still continue to rise. However, the pace will ease off and with it inflation,” says Timo Wollmershäuser, Head of Forecasts at ifo.

“The German economy bottomed out in the summer, and starting in the fall, things should slowly start picking up again,” says Timo Wollmershäuser, Head of Forecasts at ifo. His comments are in response to the German Federal Statistical Office’s report that the country’s economic output fell by 0.1% in the third quarter of 2023. “The ifo Business Climate Index rose in October for the first time since April. The outlook for the coming months in particular has brightened, but companies are also assessing their current situation as somewhat better,” Wollmershäuser says to explain the rise. He adds: “According to our estimates, economic output should increase by 0.1% in the fourth quarter.”

Slightly more companies in Germany are planning to raise their prices. After twelve consecutive declines, price expectations went up again in September from 14.7 points* to 15.8 points. “It will be some time before Germany achieves the European Central Bank’s 2% inflation target,” says Timo Wollmershäuser, Head of Forecasts at ifo. Price expectations rose particularly sharply in hospitality, from 49.1 points* to 62.8 points. Among retailers, however, the balance dropped from 33.6 points* to 31.4 points.

According to the Joint Economic Forecast, Germany's gross domestic product declines by 0.6% in 2023. This is a strong downward revision of 0.9 percentage points from the forecast made in spring 2023. "The most important reason for this revision is that industry and private consumption are recovering more slowly than we expected in spring," says Oliver Holtemöller, Vice President and Head of the Macroeconomics Department at the Halle Institute for Economic Research (IWH).

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. 

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.

German companies’ price expectations for the coming months have risen marginally, finds the ifo Institute’s survey. They rose to 16.4 points in July, up from 16.3 points in June. “For the first time since October 2022, the share of companies planning to raise their prices has on balance not declined further,” says Timo Wollmershäuser, Head of Forecasts at ifo. A growing majority of the companies surveyed are planning further price increases, especially among retailers (34.8 points, up from after 32.9 points) and consumer-related service providers (32.9 points, up from 32.7 points). “This makes it likely that the decline in domestic inflation in particular will take a little longer,” Wollmershäuser adds.

Selon les dernières prévisions de l’Institut ifo, l’économie allemande se contractera de 0,4 % en 2023, alors que l’institut prévoyait une baisse de seulement 0,1 % au printemps dernier. Les chercheurs tablent sur une hausse de la performance économique allemande de 1,5 % pour l'année prochaine, soit un peu moins que le taux de 1,7 % annoncé précédemment. L'inflation diminuera lentement, de 6,9 % en 2022 à 5,8 % cette année et à 2,1 % en 2024. « L'économie allemande peine à sortir de la récession », a constaté ce mercredi à Berlin Timo Wollmershäuser, le directeur des enquêtes conjoncturelles de l'Institut ifo.

Germany’s economic output will shrink by 0.4 percent this year, according to the ifo Institute’s latest forecast. In spring, the Institute had expected a decline of only 0.1 percent. The researchers predict an increase of 1.5 percent next year, adjusted from their previous estimate of 1.7 percent. Inflation will slowly decline from 6.9 percent in 2022 to 5.8 percent this year and then to 2.1 percent in 2024. “The German economy is only very slowly working its way out of the recession,” said Timo Wollmershäuser, Head of Forecasts at ifo, in Berlin on Wednesday.

“The German economy is divided at the start of the year.” This is how Timo Wollmershäuser, Head of Forecasts at ifo, responded when Germany’s Federal Statistical Office reported that economic output in the first quarter of 2023 stagnated. “On the one hand, manufacturers are benefiting from easing supply bottlenecks as well as lower energy prices, and they are now on course for growth. On the other hand, high inflation is eroding the purchasing power of private households and causing consumption to shrink,” Wollmershäuser adds.

Fewer and fewer German companies are planning to raise their prices in the next three months, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 21.5 points in April, down from 27.1 points (seasonally adjusted) in March. This marks the seventh consecutive decline. “This suggests that the wave of price increases has already peaked,” says Timo Wollmershäuser, Head of Forecasts at ifo. 

Somewhat fewer German companies are planning to raise their prices in the next three months, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 27.2 points in March, down from 29.2 points* in February. This marks the sixth consecutive decline. “Companies have already passed most of their increased costs on to customers. At the same time, demand has softened. This suggests inflation will slowly subside in the months ahead,” says Timo Wollmershäuser, Head of Forecasts at ifo. 

The leading economic research institutes have raised their forecast for growth in German economic output in the current year to 0.3 percent. In the fall, they were still expecting a decline of 0.4 percent. “The economic setback in the winter half-year 2022/2023 is likely to have been less severe than feared in the fall. The main reason for this is a smaller loss of purchasing power as a result of a significant drop in energy prices,” says Timo Wollmershäuser, Head of Forecasts at ifo. Nevertheless, the rate of inflation will fall only slowly from 6.9 percent last year to 6.0 percent this year.

Les entreprises allemandes ont meilleur moral, comme le montre la progression de l'indice ifo du climat des affaires, de 91,1 points en février à 93,3 points en mars. C’est la cinquième hausse de cet indice d'un mois sur l'autre. Les attentes des entreprises ont été le principal moteur de cette embellie, confirmée également par un jugement favorable, bien que plus prudent, sur les affaires en cours. La conjoncture allemande est en voie de stabilisation, malgré des turbulences sur certaines banques internationales.

The ifo Institute has confirmed its economic forecast for 2023 and 2024. This sees Germany’s economic output this year remaining at roughly the same level as last year (−0.1 percent). While consumer-related industries suffer from high inflation and are contracting, manufacturing activity will support growth. The economy is then expected to grow more strongly next year, by 1.7 percent.

L'institut ifo vient de confirmer ses prévisions conjoncturelles pour les années 2023 et 2024. Selon ses recherches, la performance économique se maintiendra cette année à peu près au niveau de l'année dernière (-0,1%). Souffrant de l'inflation élevée, l'économie allemande est en train de se contracter dans les secteurs liés à la consommation, tandis la conjoncture dans l'industrie s'avère favorable à la croissance. L’économie allemande devrait enregistrer une croissance nettement plus forte en 2024 avec 1,7 %.

Significantly fewer German companies are planning to raise their prices in the next three months, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 29.1 points in February, down from 35.2* points in January. This marks the fifth decline in a row. “Companies have already passed most of the increased costs on to their customers. At the same time, demand is waning in almost all economic sectors. This points to a decrease in inflationary pressure in the months ahead,” says Timo Wollmershäuser, Head of Forecasts at ifo. 

Fewer German companies are planning to raise their prices in the next three months, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 35.4 points in January, down from 40.1 points in December. Companies in manufacturing in particular, but also in the service sector, construction, and trade, are planning fewer price increases.

"High inflation rates have driven the German economy into a winter recession.” This is how Timo Wollmershäuser, Head of Forecasts at ifo, responded when Germany’s Federal Statistical Office reported that economic output in the fourth quarter of 2022 fell by 0.2 percent. The Federal Statistical Office had originally expected growth to be flat, based on provisional figures.

Germany’s gross domestic product (GDP) increased by 1.9 percent last year, which represents a much bigger rise than the long-term average. “However, the massive supply shocks that continue to plague the German economy have left their mark. Bottlenecks in energy, intermediate products, and the workforce – greatly exacerbated by the war in Ukraine – hampered production and drove up inflation. As a result, the country’s GDP growth for 2022 was only around half of the 3.7 percent that had been expected before the war began,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Fewer German companies are planning to raise their prices soon than in the previous month, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 40.3 points in December, down from 46.2* points in November. Price expectations fell furthest in manufacturing and construction – from 53.3* points to 42.0 points and from 38.4* points to 28.3 points, respectively. But it is also the case in trade and the service sector that fewer companies are planning to raise their prices. Price expectations here fell from 50.6 points to 42.0 points and from 41.4* points to 38.1 points, respectively. “This means that increases in producer and consumer prices are likely to gradually slow down in the months ahead. Inflation rates will, however, remain high,” says Timo Wollmershäuser, Head of Forecasts at ifo. 

The recession expected to hit Germany this winter will be milder than previously anticipated. This is a finding from the ifo Institute’s latest forecast, according to which Germany’s economic output will shrink by only 0.1 percent in 2023. In the fall, ifo researchers were still expecting minus 0.3 percent. The ifo Institute has also revised its forecast for economic output growth in 2022 upward: to plus 1.8 percent from plus 1.6 percent. “The third quarter of 2022 in particular was much better than expected, with plus 0.4 percent. In the two quarters of the 2022–23 winter half-year, gross domestic product will shrink, but after that things will start to pick up again,” says Timo Wollmershäuser, Head of Forecasts at ifo. In 2024, the economy will grow again by 1.6 percent.

Fewer German companies are planning to raise their prices soon than in the previous month, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 46.7 points in November, down from 51.3 (seasonally adjusted) points in October. Looking ahead to the Christmas season, however, significantly more toy retailers (94.4 points) report that they intend to increase their prices than in the previous month (75.4 (seasonally adjusted) points). Particularly large numbers of food retailers (95.1 points) and stationers (96.1 points) are also planning increases, as are drugstores (92.4 points) and clothing manufacturers (91.9 points). 

Higher prices for gas and oil are draining billions of euros from the German economy. The ifo Institute estimates that real income losses for the current year will amount to some EUR 64 billion, which equates to 1.8 percent of the country’s economic output. Losses incurred last year already amounted to over EUR 35 billion, or 1.0 percent. “And we estimate that next year will see losses of another EUR 9 billion or so, or 0.2 percent of economic output,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Somewhat fewer German companies are planning to raise their prices soon than in the previous month, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations for the coming months fell to 51.5 points in October, down from 53.8 points (seasonally adjusted) in September. Trade and manufacturing in particular are planning fewer increases, while price expectations are rising among service providers and in construction. “The wave of inflation has not yet broken,” says Timo Wollmershäuser, Head of Forecasts at ifo. “In particular, the high cost of energy hasn’t yet been fully passed on to consumers.” 

More German companies are planning to raise their prices than in the previous month, finds the ifo Institute’s latest survey. For the economy as a whole, price expectations for the coming months stood at 53.5 points in September, up from 48.1 (seasonally adjusted) points in August. For food, the indicator stood at a full 100 points, up from 96.9 (seasonally adjusted) points in August. “Unfortunately, this probably means the wave of inflation isn’t about to subside,” says Timo Wollmershäuser, Head of Forecasts at ifo. “Especially when it comes to gas and electricity, the price pipeline is not yet exhausted.”

The crisis on the gas markets is having a severe impact on the German economy. Soaring gas prices are drastically increasing energy costs, leading to a massive reduction of the purchasing power. Despite a decline in the second half of the year, gross domestic product is expected to expand by 1.4 percent this year. For the coming year, the institutes expect a contraction by 0.4 percent, followed by an increase of 1.9 percent in 2024.

The ifo Institute has slashed its forecast for Germany’s economic growth. “We are heading into a winter recession,” says Timo Wollmershäuser, Head of Forecasts at ifo. In the coming year, the institute now expects economic output to shrink by 0.3 percent, and growth of only 1.6 percent for this year. Inflation is expected to average 8.1 percent this year and 9.3 percent next year. “

German companies want to increase their prices on a large scale, finds the ifo Institute’s latest survey. For the economy as a whole, price expectations for the coming months stood at 47.5 points in August, down slightly from 47.6 points in July.

Inflation is eating up Germans’ additional savings. “The extra savings that many households built up during the coronavirus pandemic have now melted away. At the same time, consumer prices will continue to rise sharply. This unfortunately means that private consumption will fail to drive the German economy for the rest of the year,” says Timo Wollmershäuser, Head of Forecasts at ifo. This is the result of a recent analysis of bank balance sheets published in ifo Schnelldienst.

Companies’ price expectations in Germany fell for the third month in a row in July. According to the latest ifo survey, the proportion of companies surveyed that intend to increase their prices in the next three months has declined further. The indicator slipped to 47.4 points, down from the previous month’s 52.9 points. “Prices are still likely to continue to rise, but the pace will slow. This means that inflation has probably reached its peak and will gradually decline in the course of the second half of the year,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Germans will have to brace themselves for further food price increases over the next few months. According to an ifo survey conducted in June among food, beverage, and tobacco retailers, price expectations are at 98.9 points, which means that almost all the retailers surveyed are planning to raise prices. The majority of the surveyed retailers in the other segments also intend to put prices up: their price expectations rose to 78.6 points, up from 75.5 points. “We can therefore expect inflation rates to remain high for the time being,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Russia’s attack on Ukraine coupled with sharply rising energy prices is curbing economic recovery in Germany. The ifo Institute has reduced its forecast for economic growth this year to 2.5 percent, down from the 3.1 percent estimated in March. For next year, ifo now expects an acceleration to 3.7 percent. The institute predicts that inflation will rise to 6.8 percent and then drop down to 3.3 percent, although not until next year.

The ifo Institute expects inflation to gradually ease in the second half of the year. In a survey conducted in May, the proportion of companies planning to raise their prices in the next three months fell to 57.8 points, down from 61.8 in April, marking the first drop in this indicator for several months. “This is still the second-highest value since 2005, but the trend suggests that monthly rates of inflation will fall from above 7 percent to below 6 percent in the second half of the year, albeit very slowly,” says Timo Wollmershäuser, Head of Forecasts at ifo. “We’re expecting about 6 percent for the year as a whole.” The exception among the sectors is retail, where the share of companies planning price increases rose again slightly in May from 75.6 to 77.4 points.

Order backlog among Germany’s manufacturers is currently at a record high. An ifo survey in April found that even without a single new order, production could continue for 4.5 months. In the previous survey in January, that figure was 4.4 months. The long-term average for an order backlog is 2.9 months. 

The ifo price expectations have reached a new record level. In April, they stood at 62 points, their highest level since 1991, up from 55 points in March. This suggests that more and more companies are planning to raise their prices over the next three months.

The German economy is steering through difficult waters and faces the highest inflation rates in decades. In their spring report, the leading German economic research institutes revise their outlook for this year significantly downward. The recovery from the COVID-19 crisis is slowing down as a result of the war in Ukraine, but remains on track. The institutes expect GDP to increase by 2.7 and 3.1 percent in 2022 and 2023 respectively. In the event of an immediate interruption to Russian gas supplies, a total of 220 billion euros in German economic output would be at risk in both years.

In Germany, more and more companies are planning to raise their prices over the next three months. This is the finding of a recent ifo Institute survey. It records a new record high of 54.6 points, up from 47.6 (revised figure) points in February. People will have to expect sharp price increases in consumer-related industries in particular. Price expectations increased to 94.0 points among food retailers, to 68.2 points among other retailers, and to 64.0 points among consumer-related service providers. “Russia’s attack on Ukraine is driving up not only energy costs, but also the price of many agricultural raw materials,” says Timo Wollmershäuser, Head of Forecasts at ifo. 

The Russian attack on Ukraine is curtailing economic growth and accelerating inflation in Germany. “We now expect growth to reach no more than between 2.2 and 3.1 percent this year,” says Timo Wollmershäuser, Head of Forecasts at ifo. In December, the ifo Institute had forecast 3.7 percent growth for this year. Conversely, inflation is likely to rise faster than previously expected. ifo now expects it to reach between 5.1 and 6.1 percent, rather than the 3.3 percent it forecast back in December.

Germans ought to prepare for prices to continue rising, since many companies are planning to put theirs up in the next three months. This is the finding of a recent ifo Institute survey conducted in February, which recorded a new high of 47.1 points for the index of price expectations, up from 46.1 points in January and 44.7 points in December.

In Germany, the costs of the coronavirus crisis for the years 2020 and 2021 amount to EUR 330 billion. “This corresponds to a loss of 10 percent of 2019’s overall economic output,” says Timo Wollmershäuser, Head of Forecasts at ifo, who calculated the figures. Future losses in value added, for example due to shortfalls in education, are not yet reflected in these ifo figures. “We based our calculation on the ifo Institute’s December 2019 economic forecast for 2020 and 2021. If the crisis hadn’t happened, the German economy would have grown by 1.3 percent in each of those years.” 

With their current order books, German manufacturers can keep production going for longer than ever before: according to an ifo Institute survey, they have sufficient orders to cover the next 4.5 months. “We’ve seen nothing like it since we first asked this question in 1969. In recent months, manufacturers couldn’t process incoming orders because they lacked key intermediate products and raw materials,” says Timo Wollmershäuser, Head of Forecasts at ifo. 

Companies in Germany are planning to raise their prices further. Their price expectations for the next three months rose to a new high of 46 points in January, according to a recent survey by the ifo Institute. The index had stood at 44.7 points in December and at 45 points in November.

German consumers and companies should prepare for further price increases. In December, the ifo price expectations fell only slightly to 44.6 points, down from their all-time high of 44.9 points in November. For these price expectations, the ifo Institute asks companies about their plans for price increases in the next three months. “Such increases will filter down to consumer prices,” says Timo Wollmershäuser, Head of ifo Economic Forecasts. “Inflation will decline over the course of this year, but slowly. In the coming months, monthly rates will still exceed 4 percent and will approach the 2 percent mark only gradually toward the end of 2022. We now expect a rate of inflation of three and a half percent for the year as a whole.”

Germany’s economy is taking a hit over the 2021/2022 winter half-year, temporarily interrupting the strong recovery of last summer. “The economic standstill in winter is due mainly to the fourth wave of the coronavirus, leading to a drop in sales for the hospitality industry and other consumer-related service providers,” says Timo Wollmershäuser, Head of Forecasts at ifo.

The ifo Institute has lowered its growth forecast for Germany in 2022 by 1.4 percentage points and raised it by 1.4 percentage points for 2023. “Ongoing supply bottlenecks and the fourth wave of the coronavirus are noticeably slowing down the German economy. The strong post-pandemic recovery that was originally expected for 2022 still hasn’t materialized,” says Timo Wollmershäuser, Head of Forecasts at ifo. Economic output will grow by 2.5 percent in 2021, but by only 3.7 percent next year. In 2023, growth will be 2.9 percent.

In the course of the Covid-19 pandemic and the fall in business activity accompanying it, fewer companies than expected filed for insolvency in 2020. This is the finding of an expert synopsis prepared by the ifo Institute for the German Federal Ministry of Finance. “Taking the historical relationship between business activity and insolvency developments into account, our estimates indicated that the likely claims arising from applications for insolvency proceedings should have risen to somewhere between EUR 60 and 100 billion. Instead, they rose to just EUR 48 billion in 2020, up from EUR 34 billion in 2019,” says Timo Wollmershäuser, Head of Forecasts at the ifo Institute.

There are currently more companies in Germany wanting to increase their prices than ever before. The ifo price expectations rose to 45 points – the highest it has stood since the surveys began. In the previous month, the figure was 41 points. The ifo Institute asks companies about their plans for price increases in the next three months. “Of course, this will have an impact on consumer prices,” says Timo Wollmershäuser, Head of Forecasts at ifo. “By the end of this year, inflation is likely to rise to just under 5 percent, and the rate will start out well above 3 percent next year. On average, we now expect inflation to be 3 percent this year and 2.5–3 percent in 2022.”

Inflation in Germany is currently higher for richer households than for poorer households, according to calculations by the ifo Institute. These show that the price of a basket of goods for a household with a monthly net income of over EUR 5,000 was 4.8 percent higher in October than a year earlier. For households earning less than EUR 1,300, the rate was significantly lower at 4.0 percent. The average was 4.5 percent. “This is down to the composition of the basket of goods,” says Timo Wollmershäuser, Head of Forecasts at ifo. “High prices for gasoline and for car purchases account for a much larger share of wealthier households’ monthly expenses.”

The ifo Institute estimates that German industry has lost nearly EUR 40 billion to date in value added due to supply bottlenecks. “That’s a good 1 percent of Germany’s total economic output in one year,” says Timo Wollmershäuser, Head of Forecasts at ifo. “The current situation is absurd: despite full order books, industrial production has been shrinking since the beginning of the year. It’s experiencing a bottleneck recession.”

The Corona pandemic still shapes the economic situation in Germany. A complete normalisation of contact-intensive activities is not to be expected in the short term. In addition, supply bottlenecks are hampering manufacturing for the time being. The German economy will reach normal capacity utilisation in the course of 2022. In their autumn report, the leading economic research institutes forecast that Gross Domestic Product (GDP) will rise by 2.4% in 2021 and by 4.8% in 2022.

The ifo Institute has cut its growth forecast for Germany in 2021 by 0.8 percentage points and raised it by 0.8 percentage points for 2022. “The strong post-pandemic recovery that was originally expected in the summer has yet to materialize,” says Timo Wollmershäuser, Head of Forecasts at ifo. Economic output will grow by only 2.5 percent this year, but by 5.1 percent next year. In 2023, growth will be just 1.5 percent. “Currently, industrial output is shrinking due to supply bottlenecks for key intermediate products. At the same time, service providers are seeing a strong recovery from the coronavirus crisis. The economy is divided,” he says.

Consumers in Germany can expect inflation to amount to 3 percent this year. In 2022, it could stand at 2.0–2.5 percent. This is the finding of an ifo Institute study published today in ifo Schnelldienst. However, the main reason for the comparatively high rate in 2021 is to be found in the previous year.

The German economy saw only slow recovery in the second quarter of 2021, with a decline in manufacturing’s economic performance in particular putting on the brakes. “True, companies’ order books are full to bursting,” explains Timo Wollmershäuser, Head of Economic Forecasts, “but bottlenecks in key intermediate products prevented production from expanding.” In contrast, trade and many service providers benefited from falling infection rates, rapid vaccination progress, and the accompanying easing of restrictions in early summer. Accordingly, their sales saw a strong increase compared to the beginning of the year.

Production expectations in German manufacturing remained at a high level in June, as their indicator rose to 27 points from 26 points in May. This is a finding from the most recent ifo Business Survey.

Economists from the ifo Institute, the KOF Swiss Economic Institute in Zurich, and Istat in Rome have ended their Eurozone Economic Outlook, with the final edition put out in March 2021. These short-term outlooks for the euro area had been published four times a year since January 2004. They provided an estimate of real gross domestic product, private consumer spending, gross fixed capital formation, industrial manufacturing, and the inflation rate in the euro area for the preceding quarter and an outlook for the current and following quarters.

The ifo Institute has lowered its forecast for economic growth for Germany in 2021. It now expects 3.3 percent growth, 0.4 percentage points lower than it did in March. In contrast, it raised its forecast for the coming year by 1.1 percentage points to 4.3 percent. “The main factor dampening growth in the short term are the bottlenecks in the supply of intermediate products,” explains Timo Wollmershäuser, Head of Forecasts at ifo. “Reopening businesses triggered a strong recovery, but this is now getting pushed back a bit further than we thought in the spring. The costs of the coronavirus crisis for the years 2020 to 2022 amount to EUR 382 billion. Our calculations assume that the German economy would have grown during that time by an average of 1.2 percent per year.”

The coronavirus pandemic, production constraints in industry, and cold weather at construction sites cost Germany around EUR 50 billion in economic output in the first quarter, according to an ifo Institute estimate. The German Federal Statistical Office published a contraction of 1.7 percent in economic output for that period. “This estimate is of course subject to a high degree of uncertainty. It assumes that with no crisis, the German economy would have grown by an average of 1.25 percent per year,” says Timo Wollmershäuser, Head of Forecasts at ifo. He put the total shortfall in German economic output from March 2020 to March 2021 at around EUR 240 billion.

In their spring report, the leading economic research institutes forecast an increase in gross domestic product of 3.7 percent in the current year and 3.9 percent in 2022. The renewed shutdown is delaying the economic recovery, but as soon as the risks of infection, particularly from vaccination, have been averted, a strong recovery will begin. The economy is likely to return to normal output levels around the start of the coming year.

The ifo Institute is more pessimistic about economic development in Germany this year than it was in December. Its researchers now expect growth of 3.7 percent. Three months ago, their forecast was for 4.2 percent growth. “The coronavirus crisis is dragging on, and this is pushing back the expected strong upswing,” says Timo Wollmershäuser, Head of Forecasts at ifo. For 2022, the Institute now expects growth of 3.2 percent instead of 2.5 percent. Wollmershäuser puts the total cost of the coronavirus crisis for the years 2020 to 2022 at EUR 405 billion – measured in terms of forgone economic output.

The second wave of coronavirus will act as a brake on the German economy in the 2020/2021 winter half-year, reducing value added by EUR 1.5 billion each week. This is the result from an analysis of ifo Business Surveys. “This means the macroeconomic impact will be significantly lower than during the first wave in spring 2020,” says Timo Wollmershäuser, Head of Forecasts at ifo. “Economic output is likely to slip into negative territory only in consumer-related service sectors, where social contact is an important part of the business model.”

There is currently no sign of a wave of coronavirus-related bankruptcies in Germany. The suspension of the obligation to file for insolvency and the liquidity assistance provided by Germany’s federal and state governments have prevented it, according to the latest estimates from the ifo Institute. These are based on historical correlations between the state of the economy, corporate profits, and insolvencies. “As a result of the slump in corporate profits last year, outstanding claims should actually have been almost EUR 120 billion,” says Timo Wollmershäuser, Head of Forecasts at ifo. “Liquidity support has cut the expected level of defaults in half to about EUR 60 billion.”

The extension of the lockdown until mid-February is likely to cause the German economy to stagnate in the first quarter, according to the latest estimates from the ifo Institute. For the second quarter, the institute expects growth of around 3 percent. “Every extra week that the lockdown continues leads directly to losses in sales, production, and value added,” says Timo Wollmershäuser, Head of Forecasts at ifo.

The lockdown that entered into force in November is leaving its mark on the German economy. The ifo Institute expects economic output to have contracted by 0.1 percent in the final quarter of 2020. The shrinking of output by 5.0 percent for 2020  means a shortfall of around EUR 200 billion in economic output for that year as a whole, compared with the 1 percent growth that was forecast at the end of 2019. The economy is likely to grow by just 0.5 percent in the first quarter of 2021. “Unlike in the spring of 2020, economic output is currently suffering in just a few sectors of the economy,” says Timo Wollmershäuser, Head of Forecasts at ifo.

The ifo Institute has lowered its forecast for economic growth in Germany for next year. Its researchers now expect the German economy to grow by 4.2 percent, compared to their earlier forecast of 5.1 percent. In return, they raised their forecast for 2022 to plus 2.5 percent from plus 1.7 percent. “Recent shutdowns in Germany and other countries are pushing the recovery back. Production of goods and services won’t reach pre-crisis levels until the end of 2021,” says Timo Wollmershäuser, Head of Forecasts at ifo. “The current year is likely to end with a further decline in gross domestic product as a result of the shutdown.”

L'Institut ifo vient de corriger à la baisse ses prévisions conjoncturelles pour l'année prochaine. Ayant d'abord tablé sur 5,1 %, les chercheurs s'attendent désormais à ce que l'économie allemande ne croisse que de 4,2 %. Ils ont relevé par contre leurs prévisions pour 2022 de 1,7 % à 2,5 %. « Le nouveau confinement décrété en Allemagne et dans d'autres pays retardera la reprise économique. La production de biens et de services renouera ainsi avec son niveau d'avant-crise seulement à la fin 2021 », déclare Timo Wollmershäuser, directeur des études conjoncturelles de l'Institut ifo. « Suite au confinement, l'année en cours devrait se terminer sur un nouveau recul du produit intérieur brut ».

The ifo Institute has developed a new model for forecasting Germany’s gross domestic product in the current and coming quarter. The model’s results will be published regularly on the ifo website. “The ifoCAST gives us a faster, more accurate estimate and forecast of the current economic situation and makes our methodology more transparent to the public,” says Timo Wollmershäuser, Head of Forecasts at ifo.

The lockdown announced by the German government will significantly slow down the increase in economic output in the fourth quarter of 2020, according to rough calculations by the ifo Institute. “The measures decided on will bring the strong recovery from the summer to an abrupt end,” says Timo Wollmershäuser, Head of Forecasts at ifo. “Expenditure on ‘social consumption’ services will nosedive, which means that overall private consumer spending is unlikely to grow for the rest of the year.”

The corona pandemic leaves substantial marks in the German economy and its impact is more persistent than assumed in spring. In their autumn report, the leading German economic research institutes have revised their economic outlook downwards by roughly one percentage point for both this and next year. They now expect gross domestic product to fall by 5.4 percent in 2020 (previously -4.2%) and to grow by 4.7 percent (5.8%) in 2021 and 2.7 percent in 2022.

La crise sanitaire laisse des traces profondes dans l'économie allemande et l'impacte davantage que prévu encore au printemps dernier. Dans leur rapport d'automne, les principaux instituts de recherche économique ont corrigé à la baisse leur prévisions pour l'année en cours ainsi que l'année prochaine, respectivement, d'un peu plus de 1 %. Pour 2020, les experts s'attendent à ce que le produit intérieur brut allemand ne baisse de 5,4 % (précédemment : – 4,2 %), avant de s'accroître de 4,7 % en 2021 (5,8 %). La progression de la performance économique attendue pour 2022 est de 2,7 %.

Germany is experiencing a milder slump than expected. Its economy will shrink by 5.2 percent this year, according to the ifo Institute. In the summer, ifo researchers had predicted growth of minus 6.7 percent. “The second-quarter decline was smaller than we had feared and the current recovery is proceeding better than we had expected,” says Timo Wollmershäuser, Head of Forecasts at ifo. Consequently, growth in economic output next year will be lower: the ifo Institute now expects it to amount to 5.1 percent instead of 6.4 percent. For 2022, the ifo Institute is anticipating growth of 1.7 percent.

La chute de l'économie allemande sera moins grave que redouté. Selon les prévisions de l'Institut ifo, l'économie se contractera cette année de 5,2 %. Cet été encore, les chercheurs avaient prédit une baisse de 6,7 %. « La récession subie au cours du deuxième trimestre ainsi que la reprise actuelle s'avèrent respectivement moins grave et plus favorable que prévu », constate Timo Wollmershaeuser, le directeur des études conjoncturelles de l’Institut ifo. La performance économique de l'Allemagne connaîtra cependant une croissance moins importante l'année prochaine, l'Institut ifo tablant désormais sur un gain de 5,1 % et non plus de 6,4 %. L'Institut ifo s'attend à une croissance de 1,7 % en 2022. 

Bavaria remains the German state with the most short-time workers, according to exclusive figures from the ifo Institute. The ifo survey reveals that an estimated 17 percent of employees subject to social insurance contributions were on short-time work there in August; the figure for July was 21 percent. The number of short-time workers therefore fell from 1.2 million to 990,000. In Baden-Wuerttemberg, the figure dropped from 19 percent to 16 percent, or from 750,000 to 900,000 people. “Short-time work remains very prevalent in Laender with a large automotive and supplier industry and where metalworking and manufacturers of machinery and equipment are strong,” says ifo labor market expert Sebastian Link.

Never before in Germany’s postwar history has economic output slumped as sharply as in the second quarter of this year. “The economy has taken an unprecedented plunge. However, it bottomed out during the pandemic and is now headed back upward, although not yet to its previous levels,” says Timo Wollmershaeuser, Head of Forecasts at ifo, regarding the figures released by Germany’s Federal Statistical Office. “For the year as a whole, economic output is expected to fall by around 5 percent.”

The ifo Institute expects the German economy to begin recovering from the downturn caused by the coronavirus crisis. After economic output fell by 2.2 percent in the first quarter and 11.9 percent in the second, the ifo Institute is forecasting growth of 6.9 percent and 3.8 percent in the third and fourth quarters, respectively. “Things will gradually start to pick up again now,” says Timo Wollmershaeuser, Head of Forecasts at ifo. However, this is based on assumptions about the further course of the epidemic and the political responses to it, which come with a high degree of uncertainty.

The German economy will probably shrink by 6.6 percent this year and then grow from this low level by 10.2 percent next year, according to the updated ifo Economic Forecast for 2020/2021. “This is based on our evaluation of the ifo survey conducted among companies in May. On average, participants consider it most likely that their own business situation will return to normal in nine months,” says Timo Wollmershaeuser, Head of Forecasts at ifo.

During the coronavirus crisis in April, the sickness rate among compulsory members of Germany’s statutory health insurance scheme rose significantly. “At 6.5 percent, it was much higher than the average of the rates for the month of April in the years 1998 to 2019, which was 3.9 percent,” says Timo Wollmershaeuser, Head of Economic Forecasting at the ifo Institute, citing figures from the German Federal Ministry of Health. In total, 840,000 more members were registered as unfit for work than usual.

The downturn in economic output in the first quarter of 2020 by no means shows the true extent of the crisis, according to ifo Institute assessments. “Measures by the German government to contain the coronavirus pandemic did not slow down the production of goods and services until into the month of March; i.e., not until late in the first quarter. Much of the impact won’t become apparent until April. “According to estimates by the ifo Institute, economic output collapsed by 16 percent during the coronavirus shutdown,” says Timo Wollmershäuser, Head of Forecasts at ifo.

During the coronavirus shutdown, economic output in Germany has collapsed by 16 percent. This is the result of an evaluation of April’s ifo surveys among some 8,800 companies across almost all industries. The estimate was based on the companies’ reported capacity utilization in January and in April as well as the actual and expected difference in sales in the first and second quarters.

La pandémie du Covid-19 a déclenché une grave récession en Allemagne. Cette année, la performance économique du pays se contractera de 4,2 %. C'est ce qu'annoncent les instituts de recherche économique les plus représentatifs d'Allemagne dans leur rapport de printemps. Pour l'année prochaine, les auteurs du rapport prévoient une reprise et une croissance de 5,8 %.

The coronavirus pandemic is triggering a severe recession in Germany. Economic output will shrink by 4.2 percent this year. This is what the leading economics research institutes expect in their spring report. For next year, they are forecasting a recovery and growth of 5.8 percent.

Fighting the coronavirus is pushing Germany into recession. “Forecasts about how deep the recession will be are currently subject to extremely high uncertainty. It is therefore necessary to consider different scenarios. One scenario under consideration at the ifo Institute is highly positive, with economic output of minus 1.5 percent for 2020. However, this takes only minor declines in industry production into account. In a second scenario, which assumes greater cutbacks in production, economic output shrinks by 6 percent,” said ifo President Clemens Fuest in Munich on Thursday. 

Une perte d'un point de croissance économique en Chine causée par le coronavirus se traduirait par une diminution de la croissance allemande de l'ordre de 0,06 point de pourcentage, si cette épidémie évolue de manière similaire à celle de SRAS en 2003. Ce constat est le résultat de récents calculs réalisés par l'Institut ifo. Or, de nombreux indices font craindre que l'épidémie du coronavirus ne se révèle plus grave, ce qui entraînerait en retour un impact plus sévère sur l'économie allemande.

A slowdown of one percentage point in Chinese economic growth due to the coronavirus would reduce growth in Germany by 0.06 percentage points if the epidemic were to follow a similar course to the SARS epidemic in 2003, according to recent ifo Institute calculations. However, there are some indications that the coronavirus epidemic could turn out to be more serious. In this case, it would also affect the German economy more severely.

The weakness in German industry has so far shown little sign of spreading to other sectors of the economy. “This distinguishes the current downturn from that of the years 2011 to 2013, when Germany was caught up in the euro crisis,” says Timo Wollmershaeuser, Head of Forecasts at ifo, in response to the German Federal Statistical Office’s latest figures on economic output (GDP) for 2019.

À la fin de l'année 2012, l'Allemagne est entrée dans une récession macroéconomique. La création de valeur était en baisse non seulement dans l'industrie mais aussi dans les secteurs liées à la consommation et aux activités de construction.

Le net recul de la production automobile en Allemagne pèse sur la conjoncture du pays. C'est le résultat des estimations réalisées par l'Institut ifo. « Cette faiblesse a probablement coûté quelque 0,75 % de croissance à la performance économique allemande en 2019. Ce résultat tient compte des fournitures provenant des autres secteurs économiques », précise Timo Wollmershaeuser, le directeur des études conjoncturelles de l'Institut ifo.