BERLIN (Reuters) – Ifo expects the German economy to contract more this year due to the adverse impact of inflation on consumption, the Institute for Economic Studies said on Wednesday.
The gross domestic product (GDP) of Europe’s largest economy is expected to fall by 0.4% this year, estimates the Ifo, which in March forecast a decline of 0.1%.
“The German economy is only very slowly emerging from recession,” said Timo Wollmershäuser, the institute’s head of economic forecasts.
“When we compare Germany to our main trading partners, these countries should at least show growth,” added the economist.
For the euro zone as a whole, the Ifo expects an expansion of 0.6%. US GDP is expected to rise 0.9%.
Germany should return to growth next year, with GDP at +1.5%, against +1.7% expected previously.
Inflation is expected to slow slowly from 6.9% in 2022 to 5.8% this year and then to 2.1% in 2024. As for core inflation, the Ifo institute predicts that it will will increase to 6% this year, from 4.9% the previous year, before falling back to 3% in 2024.
Because of inflation, private consumption will decline by 1.7% this year, forecasts the Ifo. It will only start to rise again in 2024, when it should show an increase of 2.2%.
(Maria Martinez, French version Laetitia Volga, editing by Kate Entringer)
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