Ifo lifts German growth forecasts, but warns of Brexit risk

UK Independence Party leader Nigel Farage poses behind the counter of a bakery in Sittingbourne as he campaigns for Brexit. (AFP)
Updated 16 June 2016

Ifo lifts German growth forecasts, but warns of Brexit risk

BERLIN: A jobs boom and migrant-related state spending should help Germany’s economy grow faster than expected this year and next, though the extra momentum might well be lost if Britain votes to leave the EU, the Ifo institute said.
The Munich-based think tank said that, after a strong first quarter, it now expected growth of 1.8 percent this year, up from the 1.6 percent forecast in April.
But the consequences for trade and competitiveness of a European Union minus Britain could, under a worst-case scenario, shave up to 3 percent off Germany’s long-term expansion, Ifo head Clemens Fuest said.
“The biggest risk at the moment is Brexit,” Fuest told a news conference to present the institute’s updated forecasts. “Germany has very little to gain and an awful lot to lose.”
His comments joined a salvo of warnings from Britain’s European partners of economic fallout for both sides if the Brexit camp wins next Thursday’s membership referendum.
Fuest cited the risk of higher tariffs, declining competitiveness and lower transnational investments.
On the flip side were a strong German labor market and higher spending on refugees, Ifo said, also edging up its 2017 growth forecast to 1.6 percent from 1.5 percent.
“The first quarter went better than expected,” Ifo economist Timo Wollmershaeuser said.
“The German economy’s moderate economic upturn that started in 2014 is continuing into the second half.”

STRONG CONSUMPTION

The economy expanded 0.7 percent between January and March, with soaring private consumption, higher construction investment and spending on migrants more than offsetting a dip in foreign trade.
The government expects the economy to expand by 1.7 percent this year, matching 2015 as Germans’ purchasing power continues to benefit from record high employment, rising real wages, rock-bottom borrowing costs and nearly stable prices.
Ifo said consumer inflation would accelerate to 0.5 percent this year and to 1.5 percent next while unemployment was expected to further fall this year and remain stable in 2017.
The institute predicted employment would reach record highs of 43.6 million this year and 43.9 million in 2017. That should further boost domestic demand and push up tax revenue, enabling Berlin to increase spending while keeping a balanced budget.
Exports should also rise, by nearly 3 percent this year and more than 4 percent next, propelling the current account surplus to record highs.
Its updated growth forecasts make Ifo slightly more optimistic than the Bundesbank, which expects a 1.7 percent GDP expansion in 2016 and 1.4 percent in 2017.


Oman Air to resume flights to a dozen countries by October

Updated 57 min 10 sec ago

Oman Air to resume flights to a dozen countries by October

  • There will be two scheduled flights per week to Dubai and Doha
  • Those travelling to Muscat were encouraged to visit the website of the Omani Civil Aviation Authority

DUBAI: Muscat-based Oman Air will resume flights to 18 cities in 12 countries, including the UAE and Qatar by Oct. 1, national daily Times of Oman has reported.

There will be two scheduled flights per week to Dubai and Doha, the airline announced on Twitter.

The move comes as international air travel gradually returns to normal after months of shutdown due to the coronavirus pandemic.

“Masks are required when guests are on board the aircraft and in Oman’s airports. (Physical) distancing is maintained while guests board and exit the aircraft, which are carefully cleaned after each flight and at the end of every day,” the company assured in a statement, adding in-flight service has also been modified to ensure safety of passengers.

Those travelling to Muscat were encouraged to visit the website of the Omani Civil Aviation Authority, as well as relevant sources from countries of destinations, to check COVID-19-related guidelines and ensure a smooth journey.