Germany Warned of Risk to Booming Economy

Germany’s economy is at risk of overheating and burning out as deceptive indicators mask worrying threats, the country’s biggest lender has warned.

Deutsche Bank said the eurozone’s largest economy has outperformed in recent years, but the trend is deceptive and could come to an abrupt halt. There is a stark danger behind indicators that show strong employment, wage and economy growth, said the bank, Yahoo reported.

Stefan Schneider, head of the macroeconomy team at the think tank Deutsche Bank Research, said: “The German economy is already growing above its potential for the fifth year in a row.”

The warning chimes with economic researchers from the Kiel Institute for World Economy.

Head of the forecasting center, Stefan Kooths, said: “In the case of capacities that are already noticeably more used than normal, Germany is at the edge of the boom. “Against this backdrop, the risks to the economy are also increasing.”

Schneider predicted significant wage increases of more than 3% in German industries, including the metal and electrical industry, the public sector and the construction industry. He said: “This is a risk factor for Germany, especially regarding competitiveness. Resources are increasingly tense, especially on the job market.”

This is overheating the economy, along with rising economic growth, and rising house prices, according to Schneider. It means inflation will rise above 2%.

Schneider said: “The increase should be much clearer than in previous years, but it still remains temperate—it is almost overheating according to German manners.”