Ifo Industry Colloquium 2008

On 22 October 2008 the Ifo Institute hosted its eighth Ifo Industry Colloquium in cooperation with the Chamber of Industry and Commerce for Munich and Upper Bavaria, with support from the Bavarian State Ministry for Economic Affaires, Infrastructure, Traffic and Technology. The conference was devoted to an analysis of the overall economic situation and business-cycle developments in manufacturing, construction, wholesaling and retailing as well as in selected service industries. After a welcoming by Peter Driessen, executive manager of the Chamber, Hans-Werner Sinn commented on the latest business-cycle analysis and forecast and discussed the causes of the financial market crisis. In contrast to the previous year, the Colloquium this year was held amidst signs of a worldwide downturn in economic activity. In a number of industrialised countries, the economy is on the verge of recession, with Germany also being affected. Numerous negative shocks already caused a clouding of the economic climate as of mid-year, and with a worsening of the situation on the financial markets the outlook has clearly deteriorated. For the current year, an average growth rate in Germany of 1.8% is still probable. Next year at most a small plus of 0.2% is expected. Since the present situation is marked by a combination of a traditional downturn in economic activity coupled with a financial crisis, Hans-Werner Sinn focussed on the causes of the problems in the financial sector. At its core, the cause of the crisis can be found in the legal concept of limited liability, i.e., that the creditors of corporations have no claims on the personal property of the owners of these corporations. After Sinn's presentation, the business situation in manufacturing, distribution, construction and the services was discussed in detail and analysed in separate forums. The forums were opened with introductions by Ifo experts followed by contributions from external experts. A presentation by Michael Blatz, partner at Roland Berger Strategy, concluded the conference. He examined the challenges that face business leaders and policy makers in the present economic downturn.