The situation in the energy-intensive branches of production within the German manufacturing sector is likely to remain fraught, preventing an even stronger expansion of gross value added, assuming no gas shortage in the coming winter, the institute said in its economic forecast for Summer 2023.
High inflation in consumer prices will again reduce the real incomes of private households and thus consumption in the spring. It is only from the second half of the year that incomes are expected to rise more strongly than prices and private consumption to pick up, ifo Institute noted in a release.
Inflation rates are expected to fall further in the coming months.
Employment growth is likely to weaken noticeably in the coming months. The increase in employment is expected to slow from about 592,000 in 2022 to 377,000 in 2023 and 121,000 in 2024, while unemployment is expected to rise by 132,000 this year and fall again by 104,000 next year.
As a result, the unemployment rate in 2023 and 2024 will be 5.5 per cent and 5.3 per cent respectively, up from 5.3 per cent last year, the institute said.
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