Baden-Württemberg economy: The weak phase continues
According to the current nowcast of the Institute for Applied Economic Research (IAW) and the University of Hohenheim, the Baden-Württemberg economy will grow by 0.4 percent in the second quarter of 2023 compared to the previous quarter. Together with the forecasts for the third and fourth quarters, this results in a projected growth rate for 2023 as a whole of 0.6 percent compared to 2022. This would mean that the economy would only grow by half as much as in 2022.
Event announcement: Bundesbank-IAW Lecture on European Economic Integration on July 5, 2023
Bundesbank-IAW Lectureon European Economic Integration on July 5, 2023 at 6 p.m., Neue Aula, University of Tübingen Cecilia Malmström (former EU Commissioner):Changing trade patterns in a turbulent world – a European perspective
Baden-Württemberg in the Winter Recession.
In the first quarter of 2023, the economy in Baden-Württemberg is expected to contract by 0.2 percent compared with the fourth quarter of 2022, adjusted for seasonal and working-day effects. Already in the previous quarter, according to preliminary calculations, economic output already declined by 0.3 percent in the previous quarter. According to the commonly used definition, Baden-Württemberg is then in a recession phase.
EFI focus study "Innovations for and by older people" published.
On Feb. 15, the Expert Commission on Research and Innovation (EFI) presented its 2023 annual report to German Chancellor Olaf Scholz (see video). Among other things, the report deals with innovations in an aging society. In the run-up to the report, the IAW prepared a study on innovations for and by older people on behalf of the EFI. The study (in German) highlights the challenges, but also the opportunities, that arise in an aging society with regard to innovation.
Substantial increase in shadow economy in 2023 due to unfavorable economic development
For Germany and the year 2023, the shadow economy is expected to increase sharply by €60 billion (or from 9.4% to 10.2% of gross domestic product) compared with the previous year. This is mainly due to the forecast unfavorable economic development. In Germany, however, the shadow economy is growing less strongly than in most other major industrialized countries.
These are the key findings of a new forecast of the shadow economy in Germany published jointly by Professor Friedrich Schneider (University of Linz) and the Institute for Applied Economic Research (IAW). The size of the shadow economy is forecast to be 443 billion euros in 2023. This represents a nominal increase of 60 billion euros compared with 2022. The ratio of the forecast shadow economy and gross domestic product increases to 10.2%. This ratio is therefore slightly higher than in the first year of the Corona pandemic in 2020.
Baden-Württemberg labor market: demand for skilled workers remains high.
The shortage of skilled workers is an increasing problem for companies in Baden-Württemberg. The long-term trend clearly points in this direction. Against this backdrop, a recent IAW study commissioned by the Baden-Württemberg Regional Directorate of the German Federal Employment Agency addresses the question of the extent to which company strategies can counteract the shortage of skilled workers. The results show, on the one hand, that companies in sectors with a shortage of skilled workers systematically apply certain strategies more frequently than other companies: For example, further training is more likely to be offered by companies that are more affected by the shortage of skilled workers. On the other hand, reorganizations are geared to the availability of skilled workers. For example, they do not increase in-house production if no skilled workers are available. And companies with a higher proportion of vacancies invest more frequently in digitization.
Reform of the German Personnel Leasing Act (AÜG): The goals were only partially achieved.
Although many stakeholders consider the intentions and objectives pursued by the legislator with the revision of the AÜG to be fundamentally sensible, the individual regulations and their implementation are assessed as complex and only effective to a limited extent overall. In particular, the two core areas of the reform, the new regulations on the maximum duration of temporary employment and on equal pay, are seen by many as in need of improvement. The relatively small scope of the effects and the often only small or undetectable strength of the effects, which are evident in many of the evaluation's findings, are due not least to the fact that overall only a limited number of individuals and companies are affected by the new regulations, because some of the "new regulations" have already been implemented for a long time, and that the overall depth of intervention is low compared to the previous situation. For these reasons, the effects of the reform - be they desirable or undesirable - remain manageable overall.
According to the latest nowcast from the IAW and the University of Hohenheim, Baden-Württemberg's gross domestic product (GDP) declined by 0.2 percent in the fourth quarter of 2022 compared with the previous quarter, after adjusting for prices and seasonal factors. Slight economic growth of 0.3 percent is again forecast for the first quarter of 2023. The predicted economic situation thus deteriorates compared with the previous nowcast of September 2022.
