He gives 74% probability to the recession scenario of the German economy for the next three months the Institute of Macroeconomic and Economic Research (IMK). “The German economy lacks growth incentives. There is only a headwind,” emphasizes IMC head Peter Holfeld.

According to the Institute, at the beginning of August the probability of a recession was at 71.5%, but the economy remains stagnant, which increases the risk of a recession. “The expected consumption-led recovery is delayed and will probably not start until the end of the year,” the IMF said in a study published by Handelsblatt, explaining that wage increases in the second half of 2023 could not compensate for the loss of purchasing power force caused by inflation and a full recovery in private consumption is not yet underway. At the same time, the IMK points out, production in the particularly energy-intensive branches of industry is suffering from persistently high energy prices, while the situation in the construction sector will probably worsen further after the new interest rate increase by the European Central Bank, which also causes increasing financing costs for real estate developers. Exports are also in a sluggish phase, mainly due to weak demand from the US and China. “Under these conditions industrial production as a whole is currently stagnant at best,” according to the Institute, which is linked to German unions. But even the Bundesbank, in its current periodic report, predicts “a possible slight contraction of the economy in the third quarter of 2023”.

In an article entitled “Europe’s new growth engine – France leaves Germany behind”, Handelsblatt reports on the recent progress France has made in promoting reforms. “While Germany was resting on its laurels, French President Macron was reforming his country. His economic policy of recent years is now paying off”, the newspaper emphasizes and points out that while the German GDP is expected to shrink by 0.4% this year, the French one will grow by at least 1%.