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08 12 2016
Berlin's Economy Expected to Grow by Three Percent in 2016

During the first six months of 2016, Berlin experienced the fastest economic growth the city has seen in some time. This is suggested by the “Berlin Trend” for September compiled by IBB Investment Bank Berlin. The economic growth of the German capital could actually accelerate further during the second semester, according to the IBB. At a projected three percent, it would easily outpace the national growth average of 1.2 percent. Unlike the rest of Germany, virtually all industries in Berlin are reporting dynamic growth, and the decidedly favourable forecast by IBB suggests as much. For 2016 as a whole, the investment bank assumes that Berlin's economy will achieve a year-end growth of three percent. This contrasts with the 1.9-percent macroeconomic growth the IBB predicts for Germany as a whole.

Berlin Benefits from a Number of Developments

The investment bank singled out the steady demographic growth of Berlin as one of the main trends benefiting the city's economy. Another decisive factor for the above-average growth of Berlin's economy, in the opinion of IBB, is the booming tourist trade along with substantial increases in wages and pensions. These have encouraged local residents to spend more, and private consumer spending has in turn spurred the economy. The latter has also been greatly boosted by the brisk growth of the construction sector. Specifically, the total orders received by the construction industry during the first six months grew by 63.6 percent to 1.4 billion euros over prior-year period. The monthly order volume currently exceeds the historic average of 210 million euros per month by 15 percent. The sectors economic development is backed by the general growth of the city, and it profits from the historically low building finance rates. Another sector that shows a brisk growth dynamic, according to the IBB, is the digital economy. With its 12-percent rate of increase, is has actually been one of the growth leaders. Not least, however, the order book balance of industrial firms based in Berlin registered a very dynamic development (increasing by 11.1%) during H1 2016, after serious set-backs in previous quarters.

Surge in Investments Anticipated

The IBB economists believe that Berlin-based companies will step up their investments in new jobs in the coming months in order to keep expanding. The IBB's outlook suggests there is a good chance that the city is heading for a decade of increasing investments. This would have the potential to launch Berlin on a fast-growth trajectory and to secure the above-average growth rates for a longer-term period.