2024-10-06 07:58:59
According to a report, the German federal government has significantly reduced its economic expectations for the current year and, contrary to the original assumptions, now expects the recession to continue. This is shown by the government’s new growth forecast, which Economics Minister Robert Habeck (Greens) will officially present in Berlin on Wednesday, the “Süddeutsche Zeitung” reported on Sunday.
Accordingly, Habeck assumes that the German economy will shrink by 0.2 percent this year, adjusted for prices. Just a few months ago he had predicted an increase of 0.3 percent for 2024.
However, instead of picking up speed, the economy continues to be characterized by general purchasing restraint. The economic downturn will make the traffic light coalition’s budget planning in Berlin for 2025 even more difficult, according to the “SZ” report.
Germany’s leading economic institutes had already lowered their forecast for economic development again at the end of September. Instead of slight growth of 0.1 percent, experts expect a slight decline in gross domestic product (GDP) of 0.1 percent this year.
However, according to “SZ”, the federal government is assuming that the economy will gradually overcome the economic weakness and develop more dynamically again at the turn of the year. Despite the current weakness, Habeck therefore expects real gross domestic product to increase by 1.1 percent in 2025 instead of the previous one percent. According to “SZ”, the minister is expecting economic growth of 1.6 percent for 2026.
However, this more optimistic scenario is linked to the federal and state governments implementing the latest traffic light growth initiative quickly and without making any compromises. The package includes, among other things, tax improvements for companies willing to invest, work incentives for older people and foreign skilled workers, the reduction of bureaucracy and permanently lower electricity prices for manufacturing companies.
“There is still a great need for action. A first, necessary step is the growth initiative of this federal government,” Habeck told the “SZ”. The German economy could “grow significantly more strongly in the next two years if the measures are fully implemented and can have their effect.”
“Now is not the time to worry, now is the time to act quickly,” added the Green politician. He therefore appeals to all those responsible in the federal states – including and especially those with CDU and CSU government participation – to get involved: “You should all contribute to a noticeable recovery in the economic situation.”
At the same time, Habeck admitted that further measures would be necessary after the growth initiative had been implemented. “The truth is that we will need more.”
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