Economic crisis: economy: traffic light on yellow-red

The probability of that The German economy also fell into recession in the second quarter device, has decreased noticeably. This emerges from current figures published by the trade union-affiliated Institute for Macroeconomics and Economic Research (IMK) on Monday. While the economic warning light has been shining red since June last year, it now gives the all-clear with yellow-red.

The better prospects are due, among other things, to impulses in private consumption. »This is likely to increase over the course of the year in view of moderate inflation and rising wages “Significantly improving purchasing power of households will ensure that the economy will revive,” said IMK economic expert Peter Hohlfeld. The fact that production in the manufacturing sector and export activity have recently increased again also provides relief.

Another contributing factor is that the shortage of materials on the markets has decreased, as shown by figures from the economic research institute Ifo on Monday. Accordingly, only every tenth company reports bottlenecks. In the previous month that was almost five percent more. “The supply of raw materials and intermediate products has improved significantly recently,” explained Klaus Wohlrabe, head of the Ifo survey.

The situation on the financial markets has also eased somewhat. The so-called IMK financial market stress index fell by almost five points to 21 percent. In 2022 it was over 60 percent. In the area of ​​financial capital, the recent decline in inflation had fueled hopes that the ECB and other central banks would soon cut interest rates. This is one of the reasons why leading indices such as the Dax reached new highs.

In this context, records were also broken in terms of dividend distributions. The 160 stock corporations listed on German stock exchanges paid out a total of around 62.5 billion euros this year, 1.6 percent more than in 2023. This emerges from new figures from the Institute for Strategic Finance at Fom University. The payouts from automobile companies, insurance companies and banks are particularly high. According to the auditing firm Ernst and Young, the companies’ total profits fell by around six percent last year.

According to the IMK forecast, there are still significant risks on the financial markets due to the sluggish economic momentum. The premiums for default loans in particular indicated a tense situation. And global trade remains fragile due to increasing geopolitical conflicts. A further escalation in the Middle East in particular currently poses risks for the global market. On the weekend Iran fired over 300 rockets at Israelmost of which were repelled thanks to support from the USA.

IMK researcher Hohlfeld said in an interview with “nd” that the effects on the markets are currently still small, apart from a small spike in oil prices. “So far it has been taken seriously that neither side wants any escalation,” he explained. However, an escalation could have significant negative effects and trigger a global chain reaction with unforeseeable consequences, warned the economic researcher.