DIW Berlin Economic Barometer

What is the DIW Economic Barometer?

Every month, the German Institute for Economic Research issues its DIW Economic Barometer, an indicator of current economic trends in Germany. Based on the growth rate of the real GDP, it reflects the country's macroeconomic development. The DIW Economic Barometer provides an estimate for the real GDP of the last or the current quarter. In this way, it always provides an up-to-date overview of the economic development-a valuable contribution given that Germany's Federal Statistical Office issues its official data with a greater time lag. The DIW Economic Barometer is based on indicators such as production and sales in important economic sectors and is calculated using an econometric method. In addition to the current estimate (the green bar in the figure), the DIW Economic Barometer also comments on the main current influences on the economy.

DIW Economic Barometer April 2018: upswing continues at a slower pace

The Economic Barometer of the German Insitute for Economic Research (DIW Berlin) remains high but is signaling a weakening of the growth rate. It reached a score of 126 points in the first quarter and 121 points in the second quarter, well above the 100-point mark that stands for average growth.

In February, the consequences of the flu epidemic, many days of strikes, and an above-average number of holidays led to production losses, which should be made up for in the following months. The German economy may therefore grow somewhat more dynamically in the second quarter than at the beginning of the year, contrary to what DIW Berlin's Economic Barometer indicates. GDP growth is likely to be around 0.7 percent in the second quarter, which is higher than in the first quarter, for which DIW Berlin expects an increase of 0.4 percent. However, all in all, the pace in the first half of this year is somewhat slower than before: "The German economy is losing a bit of momentum," said Ferdinand Fichtner, DIW Berlin's chief economic forecaster.

However, this does not mean that the German economy is entering a cooling off phase. "The German economy will continue to grow noticeably because it's profiting from strong global demand," said Simon Junker, DIW Berlin's expert on the German economy. Even if employment growth is slowing down a bit, the number of employees is continuing to rise noticeably and wages should also rise more rapidly in light of increasing shortages in the labor market.