Researchers and ecb expect stronger growth

researchers and ecb expect stronger growth

Economists believe the german economy is far from reaching the peak of its strong growth phase.

Opinions differ, however, on the extent of further increases – and also on the question of whether risks are imminent.

The german institute for economic research (DIW) assumes that citizens, companies and the state can continue to expect a significant increase in economic output in the coming years. Gross domestic product (gdp) will increase by 1.9 percent in both 2017 and 2018, and then by 1.6 percent in 2019, according to the institute in berlin. The experts thus raised their forecast for the current year by 0.4 percentage points due to the good first half of the year.

DIW head marcel fratzscher, however, called for more investment in education, transport and data networks: "the upswing will not last, because a good part of it is borrowed. The low interest rates and the very good situation on the labor market will not last long."

The european central bank (ECB) is more confident about the eurozone economy than it was three months ago. For the current year, the central bank now expects GDP to grow by 2.2 percent (june forecast: 1.9 percent). According to the ECB, the economy in the eurozone of 19 countries is expected to grow by 1.8 (1.8) percent in 2018. For 2019, the forecasters expect unchanged growth of 1.7 percent. The ECB has not yet changed its interest rate policy, with the prime rate remaining at zero percent.

Researchers at the kiel institute for the world economy (i) also expect the national economy to develop even better. At the same time, they warned: a so-called overutilization – i.E. A possible overheating of production – is becoming more likely, which in turn makes a painful later correction more likely. This could happen, for example, if companies are not as quick to make the necessary investments when orders continue to rise. Further trends in exports and interest rates are also uncertain.

The i revised its economic expectations upward this year from 1.7 percent to 2.0 percent and next year from 2.0 percent to 2.2 percent. But the economy is increasing its output faster than is good for it, it says. With above-average utilization of production capacities, the economy is approaching the boom stage. For 2019, the institute expects GDP to increase by 2.1 percent.

The institute for economic research (IWH) in halle also takes an optimistic view of the economic situation. It raised its growth forecast for the german economy as a whole from 1.6 to 1.9 percent. Eastern germany is expected to grow faster than the national average in the coming years. IWH researchers forecast growth of 2.2 percent for the eastern states, including berlin, in 2017 – 0.3 points more than for germany as a whole.

Economic growth of 2.1 percent is expected in the east in 2018 and 1.9 percent in 2019, he said. For the german economy as a whole, growth is expected to be 2.0 and 1.6 percent respectively.

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