Economic crisis or upswing? Ifo Institute warns of de-industrialization!

Economic crisis or upswing? Ifo Institute warns of de-industrialization!

In the middle of great economic uncertainties for Germany, the IFO Institute has published alarming growth forecasts. According to current calculations, the German economy could only grow by 0.4 percent next year, unless the federal government is relating to a "more reliable economic policy". In a more optimistic scenario, where the right course is set, growth of up to 1.1 percent could be realized in 2025. According to Timo Wollmerhäuser, the institute's economic director, remains unclear whether the current stagnation is only a temporary weakness or a painful, permanent change. The tense order situation, reinforced by a tighter monetary policy in Europe and falling competitiveness of German industry, plays a crucial role here, such as ad-hoc-news reported.

economic structural change and its consequences

The IFO Institute emphasizes that an improvement in the economic framework ensures that the production capacities are expanded in industry. More investments and less job reduction could fundamentally change the work situation in Germany. This also leads to an increasing purchasing power, while the inflation rate is expected to decrease to 2.3 percent in the coming year and 2.0 percent in 2026, as can be seen from further analysis. A decline in the savings rate could boost domestic demand, which is necessary for growth, such as Fashionunited

The forecasts of the Ifo analysts also show that German export increasingly decouples from global economic recovery. In the coming years, growth of 1.2 percent is expected in the euro area, 2.5 percent in the USA and over 4 percent in China. In the worst case, Germany threatens a creeping de -industrialization in which companies shift their production abroad. In view of these economic challenges, the question remains how quickly and sustainably the German economy can stabilize.