Economic growth for Germany cut by experts

Germany’s economic growth has been revised downward by five leading economic research institutes due to factors such as high energy prices and low domestic demand impacting exports. The biannual report of these think tanks, known as the “collective diagnosis” of the German economy, was released and revealed that consumer purchasing power is crucial in improving the outlook.

According to the report, the German economy is facing challenges with its growth prospects dwindling. Economic and structural factors are contributing to sluggish overall economic development. Despite experts anticipating a recovery starting in the spring, the momentum is not expected to be significant. Domestic demand did not rise as projected due to high energy prices making energy-intensive goods less competitive, despite being a strength of the German economy.

Another factor affecting the German economy is the government’s strict fiscal policy, which is preparing to adhere to constitutional debt brake regulations limiting new debt issuance. As a result, Germany had one of the lowest-performing major economies worldwide last year. Nonetheless, growth is expected to improve in the coming year with a forecast predicting a 1.4% increase. The collaborative report was compiled by DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen and Ifo in Munich.

By Samantha Johnson

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