Germany’s Economic Slowdown: Experts Revise Forecast to 0.1% Growth This Year

Institute Decreases Forecasts for German Economy Due to Struggle

The German economy is facing challenges, with the Kiel Institute for the World Economy (IfW) revising its economic forecast for Germany. Stefan Kooths from the IFW noted that growth in the country will only be 0.1% this year, a significant decrease from previous expectations of 1.3%.

In 2023, Germany’s economic output fell by 0.3%, and experts believe that productivity in the country has been stagnant. The reasons include slower private consumption, declining exports despite global economic growth, and a struggling construction industry. While there may be a slight recovery in the spring, overall momentum is expected to remain weak.

Political uncertainty is also affecting the economy as the government struggles to finalize a growth package. The German Chamber of Industry and Commerce has echoed these concerns, pointing to high energy costs, a shortage of skilled labor, and geopolitical uncertainties impacting export business.

Despite these challenges, experts predict that the phase of very high inflation rates experienced since the middle of last year may be over. Consumer prices are expected to rise by 2.3% this year and by 1.8% next year, providing some relief for consumers. However, the institute has left its forecast for next year virtually unchanged at 1.4%.

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