Production at forklift manufacturer Jungheinrich: Winter recession will be milder
Photo: Markus Scholz / dpa
The Ifo Institute does not believe that the energy crisis, shortage of materials and high inflation will really hit the German economy in the coming year.
The Munich researchers predicted in their outlook published on Wednesday that the gross domestic product would only fall by 0.1 percent.
In September they had predicted a decline of 0.3 percent.
"The expected winter recession will be milder than previously assumed," said economic chief Timo Wollmerhäuser.
»Gross domestic product may shrink in the two quarters of the winter half-year 2022/23, but then it will pick up again.«
For the year that is coming to an end, the Ifo has increased its growth forecast from 1.6 to 1.8 percent.
"In particular, the third quarter of 2022 was much better than expected with a plus of 0.4 percent," said Wollmershäuser.
In 2024, the increase should then be similarly high at 1.6 percent.
The economists are also giving the all-clear on the subject of inflation: consumer prices are likely to rise by 6.4 percent in 2023, not only more slowly than in the year that is coming to an end at 7.8 percent, but also far less than previously estimated at 9.3 percent.
"Both numbers are significantly lower than assumed in the fall because they now take into account the electricity and gas price brake," the statement said.
With the state aid, households are being relieved of the energy costs that have risen sharply as a result of the Russian war against Ukraine.
In 2024, the inflation rate is then expected to fall to 2.8 percent.
In the coming months in particular, the sharply rising prices are likely to cause private households' real disposable income to fall and thus the economy to cool down.
"Only from the second half of the year is income likely to increase faster than prices and private consumption to pick up speed," according to the ifo Institute.
Short-time work is likely to increase again temporarily in the winter half-year and at the same time the increase in employment will largely come to a standstill.
According to forecasts, the increase in the number of people in work will slow down from around 554,000 in the year that is coming to an end to 77,000 in the next and 80,000 in the year after that.
Unemployment is expected to rise by 84,000 in 2023, but fall again by 117,000 in 2024.
"Everything is assumed that there will be no gas shortage in the next two years," emphasized the Ifo researchers.