Germany news: Economic slowdown expected in 2nd quarter

"The German government says it expects the economy to suffer a significant slowdown in the second quarter as a result of the Iran war. The prediction comes less than a month after the government halved its economic growth forecast to 0.5% for the whole year. "Rising prices, supply chain issues and uncertainty are weighing on sentiment among businesses and households," the Ministry for Economic Affairs said in its monthly report."

"It said further economic development will depend on how long the conflict in the Middle East lasts and how long trade routes and production capacities remain impaired. "But even after the situation eases, the consequences for energy and raw materials prices and supply chains are likely to remain noticeable for longer," it said."

"High energy costs have also caused Germany's energy-intensive industries to scale back production and cut tens of thousands of jobs, according to the Federal Statistical Office. Since February 2022, production fell by 15.2% in the chemicals, paper, glass, and metal manufacturing sectors. The number of workers dropped by 53,300, or 6.3%."

"Sentiment drops in residential construction sector Meanwhile, sentiment in Germany's housing construction sector dropped in April to its lowest level in four years. The Munich-based Ifo Institute's business climate index for the sector plummeted from minus 19.3 points in March to minus 28.4 points last month."

Germany expects a significant economic slowdown in the second quarter linked to the Iran war. Rising prices, supply chain issues, and uncertainty are weighing on sentiment among businesses and households. Further economic development depends on how long the Middle East conflict lasts and how long trade routes and production capacities remain impaired. Even after easing, consequences for energy and raw materials prices and supply chains are likely to persist. Germany’s energy-intensive industries have scaled back production and cut jobs due to high energy costs. Since February 2022, production fell in chemicals, paper, glass, and metal manufacturing, and worker numbers declined. Residential construction sentiment dropped in April to the lowest level in four years.

Read at www.dw.com