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A strong upswing thanks to cheap oil and a weak euro

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  • Projektgruppe Gemeinschaftsdiagnose

Abstract

On 16 April 2015 the Joint Economic Forecast Project Group presented its spring forecast to the press in Berlin. In its opinion the German economy is experiencing a strong upswing. It is being stimulated by unexpected expansive impulses, especially the falling oil price and the sharp depreciation of the euro. Gross domestic product is expected to increase by 2.1 percent this year. The 68 percent projection interval ranges from 1.1 percent to 2.8 percent. Consumption is the driving force behind the upturn. The rest of the euro area is also expected to produce slightly positive impulses, meaning that international trade will contribute to growth. The pace of growth is only expected to slow slightly in the year ahead. The euro’s depreciation will continue to stimulate the economy, while the positive effects of the lower oil price are expected to fade. Public budgets will show significant surpluses of over twenty billion euros in 2015 and 2016 respectively. In view of large structural surpluses, the time is ripe to make the income tax rate more performance-oriented – especially for small and medium-sized companies.

Suggested Citation

  • Projektgruppe Gemeinschaftsdiagnose, 2015. "A strong upswing thanks to cheap oil and a weak euro," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(08), pages 03-73, April.
    • Handle: RePEc:ces:ifosdt:v:68:y:2015:i:08:p:03-73
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    1. Matthew Higgins & Thomas Klitgaard & Robert Lerman, 2006. "Recycling petrodollars," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 12(Dec).
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    Cited by:

    1. Döhrn, Roland, 2015. "Prognosen für 2015 im Rückblick," RWI Konjunkturberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, vol. 66(4), pages 35-46.

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    JEL classification:

    • F00 - International Economics - - General - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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