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German Economy Booming – But Air Is Getting Thinner

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  • Projektgruppe Gemeinschaftsdiagnose

Abstract

On 19 April 2018 the Joint Economic Forecast Project Group presented its spring 2018 forecast to the press in Berlin. In its opinion, The German economy continues to boom, but the air is getting thinner. Unused economic capacities are gradually shrinking, leading to a slight loss of economic impetus. The pace of economic expansion nevertheless remains brisk: the upturn in the world economy will continue to stimulate exports; and the domestic economy is also expected to remain buoyant thanks to the exceptionally favourable situation in the labour market. The fiscal measures outlined by Germany’s new government in its coalition agreement can be expected to stimulate demand. Annual average economic output can be expected to rise by 2.2 percent this year and by 2.0 percent in 2019. This represents a 0.2 percentage point increase in the institutes’ assessment of growth in gross domestic product versus their autumn 2017 forecast. Employment will continue to see clear growth, but will be weakened by labour market shortages. At the same time, gross wages can be expected to increase markedly. The inflation rate will also rise gradually from 1.7 percent this year to 1.9 percent in 2019.

Suggested Citation

  • Projektgruppe Gemeinschaftsdiagnose, 2018. "German Economy Booming – But Air Is Getting Thinner," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(08), pages 03-62, April.
    • Handle: RePEc:ces:ifosdt:v:71:y:2018:i:08:p:03-62
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    Cited by:

    1. Magnus Reif & Arno Städtler, 2018. "Investment and Leasing: Dynamic Loses Impetus," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(13), pages 69-72, July.
    2. Quaas, Georg, 2019. "Ferndiagnose des RWI-Konjunkturmodells [Remote diagnosis of the RWI business cycle model]," MPRA Paper 95292, University Library of Munich, Germany.

    More about this item

    JEL classification:

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

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