Analysts expect no economic upswing in Germany until 2021

Source: Xinhua| 2019-12-13 02:42:05|Editor: Mu Xuequan
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BERLIN, Dec. 12 (Xinhua) -- The downturn of the German economy is slowing but a "noticeable recovery" is not expected until 2021 at the earliest, the Kiel Institute for the World Economy (IfW Kiel) said on Thursday.

The institute expects gross domestic product (GDP) in Germany to grow by 0.5 percent in 2019, 1.1 percent in 2020 and 1.5 percent in 2021, and is "slightly" raising its projections by 0.1 percentage points for each year after.

"The German economy will crawl into the new year," said Stefan Kooths, head of IfW Kiel's Forecasting Center.

According to the institute, the economic downturn in Germany was being driven by recession in the country's industry, where capacity utilization is below average levels.

Also on Thursday, the Munich-based ifo Institute published identical forecast figures, expecting the German economy to grow by 1.1 percent in 2020 and 1.5 percent in 2021.

"A macroeconomic recession is unlikely at present," said Timo Wollmershaeuser, economic director of the ifo Institute. Like IfW Kiel, the ifo Institute also expects the German economy to grow by only 0.5 percent this year.

The trade conflict with the United States is affecting the exchange of goods and investments. According to the ifo Institute, this is particularly hard on the German industry, which specializes in intermediate and capital goods, such as machinery and equipment.

At the same time, the ifo Institute noted that recent order intake and business expectations in manufacturing as well as a renewed increase in the exports of goods in October indicated that for Germany light is "gradually being seen at the end of the industrial tunnel."

Overall, Germany's domestic economy and especially the construction industry would continue to be "fueled by extremely favorable financing conditions," IfW Kiel noted.

Increasing by 3.9 percent in 2019, investments in Germany's construction industry are expected to slightly slow down over the next two years but still grow by 2.5 percent annually, according to IfW Kiel.

Private consumption in Germany is benefiting from high incomes and a robust labor market. IfW Kiel expects private consumption to grow by 1.5 percent this year and next, and by 1.7 percent in 2021.