Sommer 2023: Aufschwung verzögert sich in Deutschland
Economic activity stagnated in the second quarter. Although this halted the decline in output in the winter half-year, the upturn expected in the summer failed to mate-rialize. The main reason for this was the decline in exports. However, consumption and investment expanded only weakly, if at all. This weakness in demand was accompanied by a sharp decline in value added in the consumer-related hotel and restaurant sector, the energy and water supply sector and energy-intensive companies in the manufacturing sector.
Hopes that economic activity would pick up in the second half of the year have now been dashed. Instead, it is to be expected that the economic obstacles will only gradually ease. For example, companies will only be willing to invest in Germany if the underlying conditions improve. Private households will not significantly increase their spending until they feel an increase in real disposable income. A prerequisite for this is that inflation rates are brought back to normal levels.
Against this background, economic output is expected to remain weak until the end of this year. Real disposable incomes are not expected to rise more significantly until next year, with the result that households will gradually abandon their reluctance to consume. Falling inflation rates should give the ECB scope to cut interest rates again. Companies are also likely to increase their investment demand. On average, GDP is expected to decline by 0.6% this year. In 2024 GDP is likely to expand by 1.1% and in 2025 by 1.7%.
The German labor market has proved very resilient to the crisis, but the second quarter of 2023 saw a slowdown in the otherwise robust development of employment. Over the forecast period, it is also foreseeable that demographic developments will increase the pressure on the labor market. At the same time, the unemployment rate is expected to fall in the coming years from 5.6% (2023) to 5.5% (2024) and 5.3% (2025).
Although the inflation rate has fallen significantly since the beginning of the year, it is still very high. The continuing economic weakness and falling import prices are likely to mean that companies are raising their prices less frequently. Overall, we expect prices to be raised quite sharply again this year, by 6.0%. Inflation will then fall to 2.5% next year and to 2.1% in 2025.
Due to the absence of measures in connection with the Corona pandemic and higher energy prices, fiscal policy is restrictive this year and next. In 2025 it is expected to be neutral. The budget deficit in the current year is expected to fall to just under EUR 69 billion, compared with just under EUR 97 billion in 2022.
Schmidt, T., G. Barabas, B. Blagov, N. Benner, M. Dirks, D. Grozea-Helmenstein, N. Isaak, C. Krause and K. Weyerstraß (2023), Sommer 2023: Aufschwung verzögert sich in Deutschland. RWI Konjunkturberichte, 74, 3, 5-39