Economic Growth Forecast for Germany Reduced by Experts due to Weakness

Germany’s economic outlook has been downgraded by five research institutes, citing low domestic demand and high energy prices as major factors. These institutes released their six-monthly report, revising the growth forecast from 1.3% to 0.1%. The report emphasized the importance of consumers’ purchasing power in improving the economic outlook.

The German economy is struggling, with experts noting a prolonged period of economic weakness and sluggish growth forces. Structural factors and overall economic development were highlighted as contributing to this weakness. Despite potential recovery in the spring, the report suggested that overall momentum might not be significant.

One major factor impacting Germany’s economy is the lack of increase in domestic demand, partly due to high energy prices. These prices have caused a loss of competitiveness for energy-intensive goods, which are a strength of Germany’s exports. Additionally, the government’s strict fiscal policy, as a result of provisions for the constitutional debt brake, has limited the issuance of new debt.

Germany’s economy was notably the worst performing major economy in the world last year. The forecast for next year predicted growth to pick up slightly to 1.4%. This “diagnosis” was a collaborative effort from five research institutes: DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen, and Ifo in Munich.

By Samantha Johnson

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