IWH Forecast Summer 2018
German Upswing is Slowing Down
June 14, 2018
In summer 2018, the world economy is still rather strong. Dynamics in the euro area, however, have declined markedly, and the cyclical upswing in Germany has almost stalled, due to weaker exports. “Gross domestic product will, according to this forecast, expand by 1.7% in 2018 and by 1.6% in 2019. Growth in East Germany will be about as strong as in Germany as a whole”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at IWH.
The recent escalation of trade disputes raised by the U.S. government poses a significant risk to world trade and to the world economy. That said, the global economic outlook is still quite favourable. This is in particular the case for the U.S. economy, where growth is expected to be strong due to the massive fiscal stimulus. The euro area economy, however, has weakened significantly since the beginning of the year, and concerns about the fiscal stance of the new Italian government since May might further depress economic expectations in Europe.