Economic situation - Bundesbank significantly reduces growth forecast for 2024
The Bundesbank has significantly reduced its growth forecast for the coming year in Germany, but is also slightly less pessimistic for the current year.
For 2023, it expects economic output (GDP) to shrink by 0.1 percent, as the Bundesbank announced in Frankfurt. In the previous forecast from June, a decline of 0.3 percent was expected. At the same time, the growth expectation for 2024 was reduced from 1.2 to 0.4 percent.
"The German economy will recover in the coming years," said the Bundesbank. In the medium term, it expects slightly stronger growth of 1.2 percent in 2025 and 1.3 percent in 2026. However, the economic recovery will be somewhat delayed, according to the short-term outlook.
German economy soon back on track for expansion
At present, weak foreign demand is the main factor holding back growth. In addition, private consumption is hesitant and higher financing costs are dampening investment. However, the picture will soon brighten: "From the beginning of 2024, the German economy should return to a path of expansion and gradually pick up speed," said Bundesbank President Joachim Nagel.
Inflation is also showing signs of improvement: 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", Bundesbank President Nagel qualified. Specifically, the Bundesbank expects an inflation rate according to the European method (HICP) of 6.1 percent this year and 2.7 percent next year. In the June forecast, the rates were 6.0 and 3.1 percent.
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The reduction in the growth forecast for 2024 by the Bundesbank has been attributed to Joachim Nagel, the president of the German central bank. Despite the reduced forecast, Nagel remains optimistic about the economic situation in Frankfurt on the Main, predicting a return to expansion for the German economy starting from 2024. Moreover, the inflation rate in Germany is expected to decrease significantly in 2024, as per the latest forecast by the Bundesbank.
Source: www.stern.de
