New HWWI-forecast
According to the latest figures from the Federal Statistical Office, the German economy performed better in the first half of this year than geopolitical burdens and the negative mood in this country would have expected; the price- and seasonally adjusted gross domestic product increased by 0.75% in this period and by 1.5% on an annual basis. At the same time, important reform projects – such as the health care reform (in force), a pension reform and a tax reform (both as a draft) – were launched. In addition, several economic and climate indicators have improved; however, the positive change in sentiment expressed here is not always reflected in public opinion. Apart from this, the continued weakness in private investment activity illustrates the continuing need for structural reforms.
Currently, the Iran conflict and the disruption of the Strait of Hormuz continue. And in Germany, several state elections are scheduled – with potentially problematic effects on the governing coalition, the reform process and the mood in the economy. It is assumed that the current federal government will continue its work, albeit under possibly more difficult conditions. Even though the oil price is currently fluctuating strongly, a further drastic, lasting increase in energy prices seems unlikely. Under these conditions, the German economy should initially develop slightly, but more strongly in the coming year. Real gross domestic product would then grow by 1% on average in 2026 and by 1% in 2027 – if the Iran conflict de-escalates and the reform policy is implemented – also by 1%.
The inflation rate for consumer prices has recently been just below 3%. This was mainly due to significantly higher energy prices (10.5%); excluding these, the inflation rate was 2.2%. The current energy price shock will still provide some cost impulses, but the inflation rate should soon exceed its peak if oil prices tend to fall in the future. On an annual average in 2026, it would then be slightly more than 2 1/2%. In 2027, it could move back to 2%.
Press Contact
Contact
Prof. Dr. Michael Berlemann
Scientific Director
+49 40 340576-668
berlemann@hwwi.org