Economic Outlook

Joint Economic Forecast 1/19: Significant Cooling of the Economy – Political Risks High


  • Holtemöller
  • O.
  • Döhrn
  • R.
  • Kooths
  • S.
  • Michelsen
  • C.
  • Wollmershäuser
  • T.
Publication Date

The German economy has cooled noticeably since mid-2018, and the long-term upswing has thus apparently come to an end. This weaker momentum was triggered both by the international environment and by industry-specific events. The global economic environment has deteriorated – due in part to political risks – and the manufacturing sector is struggling with obstacles to production. Germany’s econ­omy is currently going through a cooling-off phase in which capacity shortages in the economy as a whole are declining. The institutes expect economic growth of only 0.8% in 2019, which is more than one percentage point less than in autumn 2018. However, so far they consider the chance of a pronounced recession with negative rates of change to gross domestic product (GDP) over several quar­ters to be slight – at least as long as the political risks do not intensify further. For the year 2020, the institutes confirm their forecast from last autumn: gross domestic product is expected to increase by 1.8%.

Kiel Institute Expert


Key Words

  • debt brake
  • debt sustainability
  • fiscal policy