In their joint economic forecast, leading institutes have relatively good prospects on two fundamental issues despite bad news for overall economic growth: The labor market is barely affected by the economic downturn, and a relaxed price development is expected.

The forecast is created by the five economic research institutes on behalf of the Federal Ministry of Economics and is available to Handelsblatt in excerpts.

The demographic change contributes to the unemployment rate remaining constant at 5.6 percent in the coming years. By the year 2025, it is even expected to decrease to 5.3 percent, as was previously anticipated for 2022.

Similarly positive expectations are hoped for inflation: It is currently at 6.1 percent for the year, but thanks to a strong decrease in energy costs, it is expected to fall below the European Central Bank's (ECB) two percent inflation target by 2025.

The community diagnosis, however, provides even worse news than previous forecasts regarding the general development. The institutions expect a contraction of 0.6 percent for Germany's economic development this year, growth of 1.3 percent in 2024, and 1.5 percent in the last year of the forecast, 2025.

Financial policy is also directly affected by the anticipated figures: Thanks to the end of corona and energy economic aids, the financial component of the state will be significantly limited. For the current year, the institutes expect a financing surplus of the state at 90 billion Euros, and for 2025, only 48 billion Euros.