ifo Institute forecasts German economy to grow 2.6% in 2018, then slow to 2.1% in 2019. It’s head of f Economic Forecasting Timo Wollmershaeuser noted that the calculations “confirm figures from our December forecast.: However, “underlying forces have shifted somewhat.”
In particular, forecast for household consumption expenditure was scaled by by 0.5% in 2018, because of lower than expected spending back in 2H 2017. Government spending forecast was raised by 0.5% in 2018, as new government policy will provide a stimulus. Export growth was revised up by 0.5% in 2018, thanks to upturn in Eurozone economy and US tax cuts.
Regarding risks, “the debate over the introduction and/or increase in tariffs on transatlantic trade and the appreciation of the euro are weakening sentiment among German companies.” Also, the new coalition government is “disappointing in terms of reforming the tax and social security system.” In particular, Wollmershaeuser said that was no response to US, France and UK tax cuts.
