Bottoming out

On 19 December 2001 at its pre-Christmas press conference, the Ifo Institute presented its economic forecast for 2002. After a weak winter semester, the German economy will gradually begin to expand during the second quarter of 2002, stimulated by the growth in the United States and by the turnaround in the inventory cycle. Real GDP for the year, however, will only increase by 0.6% in 2001 since the acceleration will come too late in the year to have a significant influence on the annual growth rate. The seasonally adjusted unemployment rate will pass the 4 million mark early in the year, and the annual unemployment will lie in this general neighbourhood. Price increases will be moderate in 2002, with an inflation rate of only 1.5% expected.