Forecast
ifo Institute: Recession is milder than expected
The expected winter recession will be milder than previously expected. This is according to the ifo Institute's new forecast. According to this, economic output will only shrink by 0.1 percent in 2023. In the fall, researchers were still expecting minus 0.3 percent.
The ifo Institute has also raised its forecast for economic output growth in 2022 to plus 1.8 percent from the previous figure of plus 1.6 percent. "The third quarter of 2022 in particular was much better than expected at plus 0.4 percent. Although gross domestic product will shrink in the two quarters of the winter half-year 2022/23, things will pick up again after that," says Timo Wollmershäuser, Head of Forecasts at ifo. The economy will then grow again by 1.6 percent in 2024.
The inflation rate will fall from 7.8 percent this year to 6.4 percent next year. Both figures are significantly lower than assumed in the fall because they now take into account the electricity and gas price brakes. The institute expects 2.8% for 2024. The high price increases will cause the real disposable income of private households to fall, particularly in the winter months, and thus cool down the economy. Only from the second half of the year onwards are incomes likely to rise more strongly than prices again, allowing private consumption to gain momentum.
According to ifo, short-time work is likely to increase again temporarily in the winter half-year. At the same time, employment growth will largely come to a standstill and will only pick up again slowly in the further forecast period. The increase in the number of people in employment is likely to slow from around 554,000 in 2022 to 77,000 in 2023 and 80,000 in 2024. Unemployment is expected to rise by 84,000 in the coming year and fall again by 117,000 in 2024. The unemployment rate will therefore rise from 5.3% in the current year to 5.5% in 2023 and fall again to 5.3% in 2024, according to the forecast. All of this assumes that there will be no gas shortages in the next two years.
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