Anticipates another economic downturn in 2024, according to the Federal Administration.
"Two years of economic shrinkage is on the horizon, according to Environmental Minister Habeck. He declared in Berlin that the nation's GDP might dip by 0.2% instead of expanding by 0.3% as predicted earlier. In 2023, we witnessed a decrease of 0.3%. This unfortunate circumstance has only occurred twice in the post-war era, back in 2002 and 2003. Back then, the red-green government tackled the situation with extensive labor market reforms, which experts credit as a major turning point. Habeck is optimistic that a positive change will surface from early 2025, owing to better wage situations and normal inflation rates. He emphasized the importance of implementing the so-called growth initiative - a collection of 49 strategies to bolster the country's standing."
"Since 2018, we've seen little significant growth in our economy," Habeck, the Green politician, outlined. "The growth initiative is a crucial first move. However, we need more for Germany to securely revert to its growth trajectory." He highlighted the necessity for a sustainable, climate-neutral power system and a reduction in bureaucracy that truly benefits the economy. "Only what provides tangible relief in practice matters."
Habeck anticipates growth rates of 1.1% and 1.6% in 2025 and 2026 respectively. The current sluggish phase should endure until then. The expected payoff from tax relief and government measures to strengthen the location will follow afterwards. Private consumption will show minimal growth this year, but expectations for more substantial progress in 2025 and 2026 are high. Exports are expected to slip this year, but a noticeable surge in 2025 and 2026 is on the horizon. The inflation rate should stabilize around the ECB's target of 2% in Germany. In 2023, consumer prices saw an unusual surge of 5.9%. The construction sector remains a cause for concern, with no sign of increased investment before 2026, following a weak year in 2024 and a possibility of stabilization in 2025.
The Federal government needs to take additional measures beyond the growth initiative to ensure a robust economic recovery. Despite the challenges, the Federal government remains committed to implementing the necessary policies to boost the economy and secure long-term growth.
