Bundesbank significantly lowers growth forecasts
Germany's economic output is shrinking more than expected this year. According to the Bundesbank's forecast, growth in the coming year will also be lower than initially assumed. The all-clear has not yet been given for inflation either, despite the decline.
The German Bundesbank has lowered its growth forecasts for Germany for the next two years, but does not expect a recession in 2024. According to the semi-annual macroeconomic forecast , inflation is also likely to remain higher than the eurozone average and even remain above the European Central Bank's (ECB) inflation target of 2% in 2026. The Bundesbank is forecasting that gross domestic product (GDP) will fall by 0.1% this year, adjusted for price and calendar effects, with a decline also assumed for the fourth quarter. In June, it had still expected a decline of 0.3 percent. Growth rates of 0.4% (June: 1.2%), 1.2% (1.3%) and 1.3% are forecast for 2024 to 2026.
According to the Bundesbank, weak foreign demand in particular is still holding back industry, private consumption is also hesitant and higher financing costs are dampening investment. However, the picture will soon brighten according to this scenario. "From the beginning of 2024, the German economy should return to a path of expansion and gradually pick up speed," explained Bundesbank President Joachim Nagel.
According to the Bundesbank, the economy will primarily benefit from expanding foreign sales markets and rising private consumption in the coming years. "Due to the stable labor market, sharply rising wages and declining inflation, private households are once again spending more money on consumption," predicted the Bundesbank. "The real income of private households is increasing significantly," said Nagel. Private investment, on the other hand, will initially fall and will not provide moderate impetus again until 2026.
The forecast also shows an improvement in inflation: according to the forecast, the inflation rate will more than halve in 2024 compared to this year. "Inflation in Germany is on the retreat, but it is still too early to sound the all-clear," Nagel qualified at the same time. The Bundesbank expects the Harmonized Index of Consumer Prices (HICP) to rise by 6.1 (6.0) percent in 2023, 2.7 (3.1) percent in 2024, 2.5 (2.7) percent in 2025 and 2.2 percent in 2026.
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Source: www.ntv.de
