According to the Munich-based ifo Institute the German economy will have to face difficult months. German GDP is expected to shrink by 2.2%. The last such drop of German GDP was registered 60 years ago. The reason for these problems is a massive decline of the world economy. The crisis on international financial markets has in the meantime reached all other sectors of the German economy.
The slowdown in the world economy has this time not only affected North America, Western Europe and Asia, but also central and east Europe, Russia, Latin America and Australia. All data available give reason to believe that in 2009 the world economy is going to see a recession.
The experts of the ifo institute forecast that annual German GDP in 2009 will fall by 2.2%. As a consequence of the global recession German exports will drop next year as well as investment into equipment and machinery. The construction industry in Germany will also have to face difficult times.
Despite increasing average wages private consumption is predicted to stagnate next year due to increasing unemployment. At the same time the saving rate of consumers in Germany will remain high as a consequence of the financial crisis. Inflation is forecast to amount to 1% on average in 2009.
The number of gainfully employed people in Germany is said to fall by 0.8% to about 40 million next year. About 540.000 people may lose their jobs in 2009 which would bring the unemployment rate to 8.0%. By the end of next year there might be about 4 million unemployed people in Germany. 