Experts from the institute for the German economy (IW) in Cologne say that next year there will not be a recession in Germany even though the economy will grow less (+0.6%). For 2008 experts expect German GDP to increase by 1.7% in real terms.
The experts warn that the slowdown in the global economy will affect the German foreign trade. Thus, in 2008 German exports are said to increase by 4.2% and imports by 3.8%. Next year exports and imports are expected to grow by just 1.5% and 1.8% respectively.
Smaller exports will also affect investment propensity which is expected to increase by 5% in 2008 and predicted to stagnate 2009.
This in turn will have an effect on the labour market. While in 2008 employment is growing it will probably fall by 40.000 people in 2009 bringing unemployment to 3.3 million people and the unemployment rate to 7.6%. Nevertheless, consumption is predicted to increase by 0.7% due to lower energy and raw material prices.