German Chancellor Olaf Scholz expressed optimism about the economic outlook in Germany during a recent trade fair in Hanover. He cited record employment levels, decreasing inflation due to lower energy costs, increased production in energy-dependent sectors, and a boost in the industry as a whole. Scholz also mentioned potential European Central Bank interest rate cuts, a rising DAX Index, and growing confidence among German businesses and consumers.
The stability of real gross value added in the industry despite inflation and temporary production declines was emphasized by Scholz. He highlighted the continuous contribution of German industry to growth, prosperity, and employment, underscoring its importance.
Recent data from the Bundesbank shows that the German economy likely avoided a winter recession thanks to improvements in manufacturing, increasing exports, and a surge in construction at the start of the year. Upcoming data such as monthly purchasing-manager surveys and Ifo business sentiment index are expected to support this positive narrative.
However, despite this potential economic turnaround, Scholz’s Social Democrats have seen a decline in electoral support according to recent polls. The ruling coalition is working on regaining voters’ trust with discussions about extending the power price brake scheme and potential tax incentives for research and development in Berlin’s next growth package.
