Economists adjust their predictions due to new factors.
The optimism among German economists has diminished. They project only a small increase in the nation's GDP this year. Nevertheless, the economy may gain momentum later in the year.
The German government's advisory body, based in Berlin, has downgraded its economic predictions for this year. Now, it anticipates a 0.2% growth rate - a drastic drop from their earlier estimate of 0.7%.
German economic specialists believe that the German economy's overall lack of demand is responsible for this dismal outlook. As Martin Werding, a member of the Council, stated, "Germany's private households are currently hesitant to spend, while the industrial and construction sectors are seeing a small influx of new orders." However, this situation may improve when private consumption starts to bolster the economy later in 2024, as real incomes are expected to increase substantially.
Notably, the German government also projects a growth rate of 0.3% this year. They attributed this to the lack of significant progress in the global economy. The EU Commission issued a forecast that predicts an even more modest growth of 0.1% for Germany this year. They cite factors such as sluggish private consumption and insufficient investment as contributing to this slowdown.
In a recent update, the Commission had predicted a growth rate of 0.3% for Germany in 2024. The German Council of Economic Experts forecast that inflation in Germany will gradually lessen this year and the next. They expect an inflation rate of 2.4% in 2023 and 2.1% in 2025. According to their projection, the German economy will expand by 0.9% in 2025.
The German government projects a 1% growth rate for this year. They believe that an increase in world trade and global industrial production will benefit German exports. Still, export-reliant businesses face fierce competition, rising labor costs, and continuously rising energy prices.
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Given the current economic situation in Germany, the German Council of Economic Experts has revised its economic outlook, predicting a modest 0.2% GDP growth rate this year. Due to this economic outlook, economists are urging the German government to implement policies that can stimulate private consumption and boost the overall economic situation.
Source: www.ntv.de
