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German government lowers economic forecast for 2020

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Christian Fernsby ▼ | October 18, 2019
The German government is expecting its gross domestic product (GDP) to grow by only 1.0 percent in 2020, Germany's Economic Minister Peter Altmaier announced on Thursday.
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In its previous economic forecast published in April, the Federal Ministry for Economic Affairs and Energy (BMWi) still expected Germany's GDP to grow by 1.5 percent in the upcoming year.

Topics: German forecast

While the outlook for 2020 worsened, BMWi confirmed its economic guidance for 2019 of 0.5 percent of GDP growth. In 2018, Germany's GDP had grown by 1.5 percent.

The "downswing" in Germany's manufacturing sector would continue as the weakness in world trade weighed "especially" on Germany's exporting companies, BMWi stated on Thursday, adding that domestic demand would continue to stay "intact", bolstered by "governmental fiscal impulses."

"Economic development in Germany is currently divided," Altmaier said, noting there would be "no threat of an economic crisis" although the economic outlook would be "dampened".

Altmaier announced to enforce economic growth by tax reliefs and a reduction of bureaucracy, "market-based solutions" for Germany's transition to renewable energy sources as well as "investments in future technologies".

"It would be wise to noticeably reduce the tax burden on companies to a competitive level," commented Joachim Lang, general director at the Federation of German Industries (BDI), on the economic forecast of the government.

Lang further noted that the German industry would "already be in a recession" and that the global economic development was worsening at a "breathtaking pace".

Steffen Kampeter, presidential board member of the Confederation of German Employers' Associations, stressed that employers would be "seriously concerned" about how many warning shots regarding economic forecasts policymakers would need in order to adapt their actions to the new "framework conditions."

On Tuesday, the International Monetary Fund (IMF) had reduced its economic forecast for Germany and is expecting its GDP to only grow by 1.2 percent instead of 1.7 percent as anticipated before.