Economic growth continues in 2019

Forecast of the HWWI

The economic boom in Germany will continue to develop positively in the next year. This is the assumption of the Hamburg Institute of International Economics (HWWI). The forecast: The economy of the Federal Republic will grow by around 1.6 percent in 2019.

The figures for the current year 2018 have been slightly adjusted downwards: from 2.1 to 1.9 percent. Especially the situation on the labor market supports the upswing. The unemployment rate is likely to fall below the magic threshold of five percent: That means full employment. The inflation rate is expected to be two percent.

The second quarter of 2018 was positive after the disruptions at the beginning of the year. The real gross domestic product rose at an annual rate of around two percent, adjusted for prices and seasonal effects.

Economy is threatened from the outside

Nevertheless, the consequences of the trade dispute with the USA are already noticeable. Despite high capacity utilization, companies are investing less than initially expected. The economic riots are also slowing private consumption. These have increased more slowly than income development would have allowed. The trend in Germany is saving for worse times.

The trade conflict and the introduction of punitive tariffs hinder trade worldwide. German exports are feeling the effects and are correspondingly lower. Imports are rising due to high demand in Germany. All in all, there are mainly external risks that threaten development in Germany. In particular, the trade dispute, with a still uncertain outcome and consequences and the BREXIT in spring 2019 are likely to be the biggest sources of conflicts for the German economy.