Germany's economy could experience a "significant cooling" in 2019 and could see sharply lower growth this year, the country's leading economic institutes have warned in a report compiled for Germany's economics ministry.
Forecasts for German growth were revised significantly downwards in a 'Joint Economic Forecast' collated by several prominent German economic research institutes and published Thursday, with economists predicting a meager 0.8% this year.
This is more than one percentage point lower than a prediction for 1.9% made in a joint economic forecast in fall 2018.
"The long-term upswing of the German economy has come to an end," Oliver Holtemöller, head of the Department of Macroeconomics and vice president of the Halle Institute for Economic Research (IWH), which coordinated this spring's report.
This weaker momentum was triggered both by the international environment and by industry-specific events, the report noted.
"The global economic environment has deteriorated – due in part to political risks – and the manufacturing sector is struggling with obstacles to production. Germany's economy is currently going through a cooling-off phase in which capacity shortages in the economy as a whole are declining," the report noted.
However, the institutes noted that, so far, they consider the chance of a pronounced recession with negative rates of change to gross domestic product (GDP) over several quarters to be slight – at least as long as the political risks do not intensify further.
The report was compiled by economic research institutes including the closely-watched Ifo and RWI institutes and is published twice a year on behalf of the German Federal Ministry for Economic Affairs and Energy.