The government believes that the economy will shrink by 0.2 percent this year, which is a significant reduction compared to its previous estimate of growth of 0.3 percent, according to the newspaper “Süddeutsche.”
Economy Minister Robert Habeck will officially reveal the latest forecasts on Wednesday.
Economy Minister Robert Habeck told Süddeutsche that the government’s proposed growth initiative has a key role in the recovery.
The newspaper quoted Habeck as saying, “The German economy could grow much stronger over the next two years if these measures are fully implemented.”
Measures include tax relief, permanently lowering energy prices for industries, reducing bureaucracy and incentives aimed at keeping older people in the workforce, as well as securing foreign skilled workers.
The German economy is the only one among the advanced economies in the world that contracted in 2023, affected by the slowdown in industry, demand for exports, and rising energy prices.
In recent months, a recovery driven by falling inflation and interest rate cuts by the European Central Bank this year has looked increasingly unlikely as demand remains weak at home and abroad.
Germany’s leading economic institutions have also lowered their forecasts and are now waiting for the economy to stagnate or contract by 0.1 percent this year.
“Instead of gaining momentum, the economy is still characterized by consumers’ reluctance to spend,” Süddeutsche said.
The economic headwinds come at a time when Germany faces increased competition with China, a shortage of skilled workers and a green energy transition.
However, the German government was optimistic in its expectations for 2025, according to the newspaper.
The Ministry of Economy will announce on Wednesday that it now expects growth of 1.1 percent next year, according to the newspaper “Süddeutsche”, up from 1 percent in previous expectations.
By 2026, the economy is expected to expand by 1.6 percent.
Source: AFP + media
#German #government #expects #recession
2024-10-08 12:07:34
Why is Germany’s economy so strong
Germany’s Economic Outlook Takes a Hit: A Deep Dive into the Revised Forecast
As a renowned economic analyst, I’ve been following the news surrounding Germany’s economic forecast closely. A recent report by the newspaper “Süddeutsche” reveals that the government has revised its economic growth estimate for the year, predicting a contraction of 0.2 percent. This update signifies a substantial downgrade from the previous estimate of 0.3 percent growth.
According to my research, this revised forecast is consistent with other predictions from reputable sources. The Joint Economic Forecast Project Group, for example, forecasts a 0.1% decline in Germany’s gross domestic product in 2024 [[1]]. Similarly, the European Commission’s economic forecast for Germany indicates that economic activity is expected to stagnate in 2024, with domestic demand picking up slowly in 2024 and 2025 <a href="https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/germany/economic-forecast-germanyen”>[[3]].
The OECD Economic Survey also provides insight into Germany’s economic trends and prospects, highlighting potential challenges and areas for improvement [[2]].
While the revised forecast may come as a disappointment, it’s essential to consider the broader economic context. The government’s revised estimate is likely a response to ongoing global economic uncertainty and potential headwinds, such as rising inflation and supply chain disruptions.
In light of these developments, Economy Minister Robert Habeck will need to adjust the government’s economic strategy to mitigate the impact of the contraction. This may involve implementing policies to stimulate growth, such as investing in key sectors like renewable energy, infrastructure, and education.
while the revised economic forecast for Germany may seem alarming, it’s crucial to view it within the context of the current global economic landscape. With careful planning and strategic policy decisions, Germany can navigate this challenging period and emerge stronger in the long run.
Sources:
<a href="https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/germany/economic-forecast-germanyen”>[[3]]
