Danger of recession: top economists see economic risks

Danger of recession: top economists see economic risks

According to leading economists, the global trade conflicts could have a considerable impact on the german economy, which is strong in exports and accustomed to success.

Although germany and europe have so far been largely spared the trade disputes emanating from the usa. In their fall report, however, the economic research institutes also warn: "an escalation of the trade conflict, leading to substantial tariff increases by the USA on a broad front, could trigger a severe recession in germany and in europe."

Countermeasures by the EU, in turn, were allowed to mitigate an economic slump in the EU and trigger a severe recession in the U.S., says the report, which will be presented this thursday in berlin.

Research institutes downgrade economic forecasts for germany. The economic upswing in germany, which has been going on for years, is losing momentum. For this year a growth of 1.7 percent is now expected, next year a plus of 1.9 percent. In their spring report, researchers had forecast growth of 2.2 percent for the current year and 2.0 percent for 2019.

The institutes cite weaker exports as one reason for the expected lower economic growth. The global economic climate is getting harsher, they say. On the other hand, shortages in the labor market, for example, are becoming increasingly noticeable. The economy has long complained of a shortage of skilled workers. Employment growth in germany is gradually weakening.

The international trade climate has "deteriorated drastically" since the beginning of the year, the institutes write, pointing to the announcement and implementation of punitive tariffs by US president donald trump. "They initiated a worldwide spiral towards more protectionism."The affected trading partners, above all china, reacted with counter tariffs.

The latest extension of the U.S. Punitive tariff to now cover half of all imports from china represents another serious step toward escalating the trade dispute. "There is a risk that the hurdles in world trade will become higher and seriously damage the multilateral trading system"."

With the exception of tariffs on steel and aluminum products, the EU has so far only been affected to a minor extent. But the tariff hikes on cars threatened by the U.S. Made it clear that the european union could also be dragged deeper into the trade conflict.

Higher tariffs for cars could hit the strong german car industry especially hard. The U.S. And the EU are currently negotiating the elimination of tariffs on industrial goods.

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