Quarterly Report Germany I/2016

Turbulence imperils robust recovery. German economy in choppy waters.

Turbulent financial and commodity markets and security issues threaten to throw a strengthening world economy off track. With 2015 having been the weakest post-crisis year, we now expect the growth rate to rise slightly to around 3.25 to 3.5 percent.

The United States, Europe and Japan will likely continue their moderate recovery, but China will see further slowing. Growth rates for emerging market countries and for most of the advanced industrialised countries will probably increase slightly. Brazil and Russia should be in for another year of declining economic output.

The German economy will be primarily driven by domestic factors in 2016. The main domestic driver is private consumption, which is supported by ongoing labour market improvement and low inflation. The public sector is expected to spur demand as well. But low interest rates and stronger corporate balance sheets alone are insufficient to properly boost investment, particularly given the unsettling current geopolitical situation and China’s ailing stock markets. This year’s GDP is projected to grow at an annualised rate of 1.9 percent, provided that global economic conditions remain more or less in line with forecasts.

Contact

Thomas Hüne
Senior Manager
Research, Industrial and Economic Policy
BDI e.V.

+493020281592
+493020282592