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BUSINESS

Munich ranked Germany’s most-successful city

For the fifth year in a row, Munich is Germany's most economically successful city, according to a new study published in weekly business magazine Wirtschafts Woche on Friday.

Munich ranked Germany's most-successful city
Photo: DPA

The study, conducted in tandem with the Initiative for New Social Market Economy (INSM) reviewed conditions in the country’s 50 largest cities for the last five years, ranking them in terms of economic strength and dynamism. Munich’s wealth, job market and economic structure earned a first place ranking for overall success, followed by Münster, Frankfurt, Karlsuhe, and Düsseldorf.

Meanwhile Saxony’s capital city of Dresden was the country’s most dynamic. Other formerly communist East German cities are “on the fast track,” including Chemnitz, which jumped 23 rankings to 10th place last year, and Rostock, up to 23rd place from almost last place. These cities on the study’s dynamism rankings can thank attractive worker costs and high investment quotas for their new success, the study said.

Capital city Berlin tanked for the second year in a row, earning last place overall. The job market in the city is worse than any other large city.

Cities in the German state of North Rhine-Westphalia also ranked at the bottom of all aspects of the study, with Wuppertal in last place for dynamism. Meanwhile Herne’s status deteriorated the most of any city in the study, falling 22 ranking to 34th. The gap between the struggling cities and the leaders is shrinking, though, INSM head Max Höfer said on Friday.

The study, conducted anually since 2004, included criteria such as average incomes, gross domestic product and pro-business atmosphere.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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