Economic situation - Investment Bank: 1.5 percent economic growth possible
Investitionsbank Berlin (IBB) believes that economic growth of 1.5 percent is possible for the capital in the coming year. "The high-turnover service sector in the German capital has supported growth this year and allows us to expect GDP growth of around 1.5 percent in Berlin for the coming year," said IBB CEO Hinrich Holm on Thursday. For the current year, the investment bank expects growth of around 1 percent despite the tense situation.
This puts Berlin in a better position than the rest of the country, at least as far as expectations are concerned. Several economic institutes have recently significantly lowered their nationwide forecasts for the coming year. The Ifo Institute, for example, is now forecasting nationwide growth in gross domestic product (GDP) of just 0.9% instead of the previous 1.4%. The German Institute for Economic Research (DIW) lowered its forecast from 1.0% to 0.6%. The economic researchers expect the economy to contract by 0.3% in 2023.
Consumers in Berlin have also been very cautious when it comes to spending, the IBB added. This is due to real wage losses of up to three percent due to inflation in four consecutive quarters. "Only in the course of 2024 should the consumer mood slowly return with more reliable real wage increases and stabilize growth," it said.
Momentum on the labor market also remains positive, albeit at a lower level. The number of employees subject to social insurance contributions rose by 1.1 percent to around 1.69 million in September. The increase was thus twice as high as nationwide. However, the momentum on the labor market had slowed noticeably after the highs in May 2022, it said. At that time, the number of people in employment had risen by 4.8 percent year-on-year.
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The German Institute for Economic Research (DIW), like other economic institutions, has revised its growth forecast for the nation down to 0.6%, suggesting a less favorable economic situation overall. Despite the cautious consumer spending in Berlin due to inflation-induced real wage losses, Investitionsbank Berlin (IBB) remains optimistic about a 1.5% economic growth in the city for the coming year. This difference in expectations highlights Berlin's relative strength in the German economic landscape.
Source: www.stern.de
