GERMANY: Economists expect “modest upturn” in 2015-16

German economists forecast growth of 1.8% in 2015 and in 2016 respectively, versus 1.6% in 2014. These are the results of the Joint Economic Forecast by the economics institutes released in Berlin on Thursday.

“The German economy is experiencing a modest upturn, which is primarily driven by private consumption. The weak world economy is a constraining factor, especially the problems in a number of emerging economies”, explained Timo Wollmershäuser, Interim Director of the Ifo Center for Business Cycle Analysis and Surveys.
“The immigration of refugees is placing a significant short-term burden on the German economy. But it could also create opportunities if the right economic policy measures are implemented to successfully integrate immigrants,” he added.
Economists expect unemployment to rise slightly to 2.875 mln next year, up from 2.80 mln this year, which will nudge the unemployment rate up from 6.4% to 6.5% in 2016. At the same time, however, the working population is expected to grow from 42.9 mln to 43.2 mln persons.
Consumer prices will rise by 1.1% in 2016, after increasing by just 0.3% this year. The government’s budget surplus is expected to drop from 23 bln euros in 2015 to 13 bln euros in 2016. This would be equivalent to 0.4% of annual economic output versus 0.8% in 2015. The current account surplus (goods, services and transfers) will increase from 256 bln euros to 260 bln euros, but will fall from 8.5% to 8.3% as a percentage of economic output.