Eight of Europe’s leading economic institutes have recently forecasted that Germany could experience a steep economic slowdown during the next 12 months. Each of these eight institutes converge biyearly to offer an aggregate forecast of Germany’s economic growth.
Just six months ago the projected economic growth rate for Germany in 2012 was 2%, however during the most recent calculation that statistic has been brought down to a 0.8% growth rate. According to the eight think tanks, the drastic reduction in the projected economic growth rate is primarily due to the debt crisis in the eurozone.
In contrast, 2010 saw the German economy grow 3.6%. Any threats to the German economy would likely have a widespread impact throughout Europe, as it would make it much more difficult for European countries to avoid a repeat recession. Six of the eight institutes that have predicted the possible coming German economic slowdown are based in Germany: RWI, ifW, IWH, Ifw, Kiel Economics and ZEW.
The institutes primarily attributed the forecasted economic slowdown to an obvious rise in uncertainty, which will likely have a detrimental effect on domestic demand and German exports. As the euro zone debt crisis continues to cause foreign investors to be weary, it seems that every nation in Europe is facing economic turmoil at the moment. However, Germany’s strong exports, particularly in the automobile and engineering markets, have allowed the country to avoid economic recession and fight through the global financial crisis with more success than surrounding nations.
Unfortunately, as investors and consumers in European nations and the rest of the world continue to safeguard their funds and make conservative spending decisions, the demand for luxury German exports are undoubtedly dropping. A recent vote shows that Germany is committed to preserving the euro zone, despite some countries expressing the desire to restructure.
