Spring economic forecast
Ifo Institute: German economy to stagnate in 2023
The Ifo Institute has confirmed its economic forecast for 2023 and 2024. According to this forecast, economic output this year will remain at roughly the same level as the previous year (-0.1%). While the economy in consumer-related sectors will suffer from high inflation and shrink, the industrial economy will support growth.
In the coming year, the economy should then grow more strongly, by 1.7 percent, according to the institute. "After a further decline in gross domestic product of 0.2 percent in the first quarter, the economy will recover as the year progresses. Rising real wages will support the domestic economy from the middle of the year at the latest," says Ifo economic researcher Timo Wollmershäuser.
In addition to noticeable increases in collectively agreed wages, gradually falling inflation rates are also contributing to this. "Inflation has peaked. At an average of 6.2 percent in 2023, the rate is already likely to be lower than last year. In 2024, rates will then normalize and inflation will reach 2.2%," he adds. Falling energy prices and a gradual resolution of supply difficulties in the industry are the reasons for this.
According to Ifo, the economic weakness will slow the recovery on the labor market somewhat this year. The increase in the number of unemployed by almost 50,000 people is mainly due to Ukrainian citizens, who will gradually be integrated into the labor market during the forecast period. The unemployment rate is therefore likely to fall back to 5.1% as early as next year, after 5.4% this year and 5.3% last year.
The state budget will remain in the red this year and next, at 1.3% and 0.3% of economic output respectively. However, the government financing deficit will be significantly lower than expected in December. In particular, the expenditure budgeted for the state energy price brakes has been reduced by a total of a good 35 billion euros because, from today's perspective, the procurement prices for electricity and gas are lower than expected in the forecast period. According to the institute, the current account balance will rise again to 5.9 percent of economic output by 2024, after temporarily falling to 3.8 percent last year as a result of the sharp rise in import prices.
You might also be interested in
Why the crisis continues
How deep is Germany's chemical industry really in crisis in 2026? After a weak start to the year, burdened by the conflict in the Middle East, high energy costs and global competitive pressure, the German Chemical Industry Association (VCI) paints a...
read more...Stratasys takes over MarkForged
Stratasys is acquiring MarkForged from Nano Dimension for USD 42.5 million, thereby expanding its portfolio in the field of fiber-reinforced composites. The acquisition also strengthens the company's software and materials expertise in industrial 3D...
read more...Wittmann reorganizes the management
Wittmann reorganizes the management team: From May 2026, owners Michael Wittmann and Dr. Werner Wittmann will combine the management of the entire group of companies in a dual leadership team. Rainer Weingraber is leaving the company.
read more...Electricity price subsidies decided
Industrial electricity price is coming, VCI warns of limited effect
The EU Commission has approved the German industrial electricity price: Until the end of 2028, electricity costs for energy-intensive companies can be subsidized with 3.8 billion euros and capped at five cents per kilowatt hour. The VCI criticizes...
read more...Industry insists on reforms before EU Council
At the European Industry Summit in Antwerp, companies and associations called for concrete, measurable steps towards greater competitiveness in Europe. VDMA, VCI, Plastics Europe, ZVEI, BDI and VDA also called for speed in reducing bureaucracy,...
read more...50 years of Plagiarius: How brazen product counterfeiting damages innovation
For the 50th time, the "Plagiarius" award ceremony is bringing brazen product copies into the public eye. The negative award highlights the extent of the economic, security-related and social damage caused by product and brand piracy and why the...
read more...ifo Institute lowers growth forecast
How much will the German economy grow in 2026?
The ifo Institute is revising its economic forecast downwards: It expects growth of just 0.1% in 2025 and 0.8% in 2026. The reasons for this are structural change, bureaucracy and US tariffs.
read more...Supply Chain Act: No German special path
17 Business associations demand suspension of the LkSG
German companies fear competitive disadvantages due to the national Supply Chain Due Diligence Act (LkSG). 17 business associations are calling for the law to be suspended and for the national scope of application to be adapted to the EU CSDDD...
read more...German exports: sentiment improves, upward trend fails to materialize
Sentiment in the German export industry brightens slightly: Ifo export expectations rise to -1.2 points in January 2026. The automotive and electrical industries in particular expect exports to grow.
read more...