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The main economic research institutes in Germany have revised back to the poor and significantly its growth forecast for the economy of the germans. While the spring is still expected that the GDP will grow this year by 0.8%, now have only with the GDP growth to reach 0.5% . The trim is wider to 2020, from 1.8% to 1.1%.
confirmed the forecasts, the German GDP is going to suffer the greatest economic slowdown since 2012 , when the country experienced its last recession, but the data is more explosive, is a phrase that appears in the foreword of the document that the experts just released in Berlin, which states that, in these circumstances, “to comply with the zero black would be harmful” , in reference to the strict budgetary balance, and rejection of the creation of new public debt that has kept Merkel during four legislatures in a row and that is now also his Finance minister, social democrat Olaf Scholz.
The policy of zero deficit is now detrimental, write the five economic research institutes, because the German industry is already in recession and the forces of growth of the economy are declining. The report portrays a Germany that, driven by its industrial sector, and without any other driving force, leads inevitably to the recession after six years of continued growth.
“The German industry is in a recession, and this now is also affecting the suppliers of services that will cater to these companies”, stated Claus Michelsen, Head of the Department of Forecasting and Economic Policy at the German Institute for Economic Research (DIW Berlin). “The fact that the economy stays still in expansion is mainly due to the continuous positive mood of the household expenditure , which has been driven by poor wage agreements, tax exemptions and the expansion of federal transfers,” says Michelsen, who notes, however, that this expenditure of the families that short-term saves the data macro, you can become a heavy ballast in the medium-and long-term .
“The reasons for the cooling are found primarily in the international trade and has its most immediate effect in the industry,” the report says of the autumn forecast. “ The production has been reduced from the middle of last year, particularly as the demand for capital goods in key markets has weakened,” she says, putting the focus on the political risk, much of the confrontation between the US and China as a Brexit messy . “It would cause GDP to out-0.4% lower in the next year that if there was an orderly exit”, has provided Michelsen.
The German economy recorded its first contraction quarterly in the second quarter for the first time since the start of 2013. The Bundesbank has been argued that the economy turned to register a fall in the third quarter of the year. Given the deterioration of the situation, has cut its forecast of how severe this year and the next. All in all, the services studies ensure that there is no provision for a crisis on a large scale. “An economic crisis with a steep under-utilisation of the economy is not in sight . However, the risks cyclical to the downside are currently high,” said the joint statement of the five institutes of economic analysis (IFO of Munich, DIW of Berlin, IfW Kiel, IWH in Halle and RWI in Essen).
Without the need of fiscal measures additional
it Is expected that the German Government will publish its own growth forecasts to the end of this month. In April, already predicted a growth of 0.5% in 2019 and 1.5% for 2020. The institutes that advise the government of Berlin, which is currently there is no reason to take fiscal measures additional , but they insist that you should use their fiscal space if the economic recession turns out to be worse than expected. “It would be fundamentally wrong to continue with the policy of ‘zero deficit’,” he repeated Michelsen.
under the rule that stops the debt of germany, the federal Government you can take a new debt of up to 0.35% of the economic output . This would amount to approximately 5,000 million euros (5.500 million dollars) in 2020, once they have been taken into account special factors such as the growth. The debt allowed would amount to 8,400 million euros in 2021 and to 9.700 million in 2022, according to experts in Parliament’s budget.
Until now, Merkel has announced a package of extraordinary 54,000 million euros, 100,000 million until 2023, intended to policies of climate protection, but increase the critical to this initiative by “insuficient” and because the money will come primarily from new taxes, in lieu of credits as cheap as that provides a scenario of zero rates.
