Marcel Fratzscher, President of the German Institute for Economic Research (DIW), has cautioned about the impact of intense heatwaves on the German economy. According to Fratzscher, increased illness tied to high temperatures puts pressure on production, as extreme weather conditions result in more sick days.
The head of the DIW is therefore pessimistic about the economic outlook for the current year, failing to rule out a further contraction of the economy. Despite a recent increase in industrial orders, he currently anticipates stagnation or only very slightly positive growth for the German economy, with the industrial sector projected to shrink again.
While more orders represent a positive sign, Fratzscher noted that there are numerous negative factors weighing on businesses simultaneously. He listed rising energy costs stemming from the war in the Middle East and trade conflicts with the United States as examples of these burdens.
Regarding the record low water levels in German rivers, Fratzscher currently views the situation as manageable. However, the DIW President warns that this could escalate into a genuine economic risk. If the low water level persists for another four to six weeks, it could cause significant damage to the wider economy.
