Economic Forecast for Berlin: The Boom Continues
Berlin's economy is starting into the second half of this year with a bright outlook. For Q3, the IBB Investitionsbank Berlin anticipates an economic growth of 2.5 percent year on year. Assuming the forecast is correct, it would mean a continuation of the great performance of this year to date: Berlin's economy outperformed in both the first and the second quarter of 2015. Compared to the relevant prior-year quarter, the gross domestic product of Germany's first city rose by 2.1 percent and 2.3 percent, respectively. By the end of the year, Berlin's gross domestic product is likely to have grown by 2.2 percent according to the IBB forecast, once again outpacing the national growth average of 1.9 percent. It would be the sixth consecutive boom year for Berlin's economy.
Incoming Migration Generates Robust Consumer Climate
The reasons that the IBB economists cite for the city's economic growth include the growing service sector and the robust consumer climate, which benefits from the massive incoming migration to Berlin, the sustained inflow of tourists, and the high gains in real wage increases. This situation resulted in a 6.5 percent one-year increase in retail sales by April 2015. For the sake of comparison: Average retail sales in Germany as a whole gained merely by 2.4 percent during the same time.
The economic growth also stimulates Berlin's employment market, with the number of employees covered by social security rising steadily. By the end of the year, the unemployment figure is expected to have dropped to an average of 195,000. This would be an improvement of the unemployment average of roughly 203,000 in 2014. Even now, one in three businesses has more employees on its payroll than last year, according to the IBB.
The IBB also assumes that Berlin's economy will benefit from the improving parameters of the global economy as the year progresses. Having been off to a surprisingly slow start into the year 2015, the third quarter is now expected to bring an upturn. The IBB believes that such a development will help to stimulate business in Berlin even further.