BERLIN (REUTERS) – Germany’s leading economic institutes on Wednesday (Oct 2) slashed their growth forecasts in Europe’s biggest economy for this year and next, blaming weaker global demand for manufacturing goods and increased business uncertainty amid trade disputes.
The revisions, which feed into the government’s own output projections, reflect growing concerns that a slowdown in Germany driven by a recession in the export-dependent manufacturing sector could hamper the broader euro zone economy.
The institutes said they now expect the German economy to grow by 0.5 per cent this year and 1.1 per cent in 2020. This compared with their April estimates of 0.8 per cent and 1.8 per cent respectively.
“An economic crisis with a pronounced underutilisation of the German economy is … not in sight, although the cyclical downside risks are currently high,” the institutes said.
For 2021, the institutes predict a mild recovery with an economic expansion of 1.4 per cent.
The government is due to publish its latest growth forecasts later this month. In April, it predicted growth of 0.5 per cent for 2019 and 1.5 per cent for 2020.
Earlir on Wednesday, German Finance Minister Olaf Scholz said the country would be able to counter an economic crisis if there were one but added that he did not expect a downturn as bad as in 2008/2009.
“We are well prepared because we have decent financial resources so if there is an economic crisis, we can take countermeasures but at the moment we’re only seeing slower growth,” Scholz told public broadcaster ARD.
He said if a crisis as serious as in 2008/2009 were to appear on the horizon, Germany would “be able to do everything that is necessary” but added that he did not foresee such a scenario, with forecasts pointing to the economy improving – albeit more slowly than had been previously hoped.