DIHK expects German economy to stagnate this year

The German chambers of commerce and industry (DIHK) is out with their latest comments on the economy and it still isn’t one that is too positive. While expecting private consumption grow by 1.0% and to support the economy, they note that “the current situation of companies is poor, and even bad in industry”. Adding that “expectations do not show a strong upward trend”.

The only positive development is that inflation pressures are likely to ease further this year. But the manufacturing sector is still one that is holding a negative outlook for the most part.

Well, the good news at least is that prospects for the German economy have definitely improved since January. That has already changed up views on the euro area outlook as a whole, as evident by the pressure on the ECB to cut rates further after June.

DIHK isn’t wrong to argue that there is a big dark cloud hanging over the industrial sector. But for now at least, the services sector is doing its part in dragging the German economy through the mud. We’ll see if that changes in the months ahead, with the inflation outlook also one to watch.

This article was written by Justin Low at www.forexlive.com.