Financial circumstances - DIW economists: The German economy is gradually healing.
The German economy is predicted to gradually accelerate, according to the Research Institute DIW's analysis. The DIW economists have raised their projection for economic growth this year to 0.3 percent. Initially, they had anticipated just 0.1 percent in March.
In contrast, growth of 1.3 percent is projected for the next year, as mentioned by the German Institute for Economic Research in Berlin. The economic development is expected to gain a steady momentum throughout this year, according to the DIW. Private consumption will serve as the primary catalyst for the recovery.
Earlier in spring, there was apprehension and savings due to concerns about one's personal financial situation. However, private households are now probably feeling more financially secure. "For private consumption, all signs point towards green, which could make it the primary catalyst for growth," DIW's Chief Economist Geraldine Dany-Knedlik commented. Following one-time bonus payments in several industries, price increases would become effective, enhancing financial security and stimulating consumption. Even low-income households could have enhanced incomes, as the DIW suggests. Adding to this, inflation is anticipated to decline.
The DIW's predictions align with other research institutions that released their newest predictions on Thursday. For example, the IfW Cologne anticipates 0.2 percent growth this year (2025: 1.1 percent), and the RWI Essen predicts 0.4 percent (2025: 1.5 percent).
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The current economic situation in Germany has improved, as indicated by the DIW's observation of a gradual healing of the German economy. Despite the positive outlook, the German economy is still predicted to operate under recession conditions, with a projected growth of only 0.3% for this year. However, there's optimism for the future, with a projected growth of 1.3% for the following year, as suggested by the German Institute for Economic Research in Berlin.
The role of an economic researcher, such as DIW's Chief Economist Geraldine Dany-Knedlik, is crucial in interpreting economic trends and making projections. In this context, Dany-Knedlik has commented that private consumption could serve as the primary catalyst for growth, marking a positive shift from the apprehension and savings observed earlier in the year.
The economic research carried out by institutions like the DIW in Berlin plays a significant role in shaping the economic policies and projections for Germany. These forecasts can impact various sectors, including industries offering one-time bonus payments, which in turn can enhance financial security and stimulate consumption, even among low-income households.
