Germany’s gross domestic product (GDP) was likely to fall by 0.1 percent for the three-month period covering April to June, compared with the previous month, according to the Ifo Institute for Economic Research, with the lacklustre performance due in part at least to concerns over Britain’s protracted exit from the EU. And corporate bankruptcies in the country have been tipped to rise for the first time in a decade, hitting 20,000, according to credit agency Creditreform – with Brexit once again a likely factor. Speaking to Austria-based daily newspaper Die Presse on Tuesday, Ifo’s deputy director Timo Wollmershauser said the German economy had been fluctuating since 2018, with GDP dropping by 0.2 percent last summer before picking up somewhat at the start of the year.
Despite his predictions of a slump in the spring, he stressed he did not anticipate two consecutive quarters of losses, stressing: “We have no indications of a recession.”
However, in view the danger of a possible hard Brexit, which would prove highly damaging to the German car industry, and growing tensions between the US and Iran, he acknowledged the economic expectations of investors are still plummeting.
However, Ifo president Clemens Fuest urged the Government to resist to temptation to embark on a programme of public spending to stimulate the economy.
He said: “It does not make sense to start something like a stimulus package.”
In reference to Brexit, he said: “Many factors that put a strain on the industry are also coming from abroad.”
In June the barometer of the Mannheim ZEW fell by 19 points to minus 21.1 points.
ZEW President Achim Wambach said “a substantially worse economic development” in Germany at the beginning of the second quarter had also contributed to the pessimism.
Recently, the Bundesbank also joined the economic pessimists, predicting a decline in economic output in the current second quarter.
According to the Ifo Institute, the German economy will grow less than half as much this year as it did in 2018, with GDP increasing by just 0.6 percent.
Essen-based research institute RWI is forecasting an increase of 0.8 percent.
Either way, the increase would be substantially smaller than the 1.4 percent last year.
RWI Chief Economist Roland Dohrn said: “There are increasing signs that the growth of the German economy is slowing down.
“This is suggested, among other things, by lower order intake in the industry and a weaker job creation on the labour market.”
German Minister of Economics Peter Altmaier said: “We have to invest domestically, invest more.
“We have a good domestic economy. Construction is booming, consumer spending is on the rise.
“On the other hand industrial activity is not strong enough due to trade disputes and Brexit.”
Creditreform predicted there would be 20,000 corporate insolvencies in Germany this year, an increase of about three percent compared with 2018, reported finance.net.
The number of bankruptcies in Germany has not increased compared with the previous year since 2009.
The decisive factor for the expected trend reversal is the development in the export-oriented German industry, which is now suffering noticeably from the consequences of the trade war between the US and China and other economic turmoils such as Brexit.
(Additional reporting by Monika Pallenberg)