German research institutes lower 2019 GDP forecast amid weakening economic outlook

IfW and DIW slash their 2019 GDP forecasts for the German economy

Germany

  • IfW now sees German economy expanding by 0.4% this year (previously 0.6%)
  • Sees 2020 GDP at 1% (previously 1.6%)
  • Notes that German economy likely shrank by 0.3% in Q3
  • Therefore, falling into a technical recession
  • DIW now sees German economy expanding by 0.5% this year (previously 0.9%)
  • Sees 2020 GDP at 1.4% (previously 1.7%)
  • Further risk next year comes from no-deal Brexit
  • If that happens, it would slash a further 0.4% off 2020 economic growth
Looking at both the downgrades, it pretty much reaffirms the negative growth outlook seen in the German economy in the second-half of this year. A technical recession isn’t confirmed just yet but the signs and data released so far are suggestive of one.
Notably, DIW says that Germany needs a long-term government investment program to help lift economic confidence and the growth outlook. Yeah, that doesn’t look like one is coming any time soon after yesterday’s budget announcement.