German economic expansion projections by Ifo Institute have been significantly increased for the current year.
Economic growth in Germany is seeing a more optimistic outlook, with the Ifo Institute revising its forecast. The initial projection of a 0.2% increase in GDP for this year has been bumped up to a 0.4% rise, as per the institute's report published on Thursday. For the following year, a growth rate of 1.5% is anticipated.
Timo Wollmershauser, head of the Ifo Business Cycle Research Institute, expressed optimism, stating, "There's a glimmer of hope." He added that the German economy is slowly climbing out of the crisis. The latter half of 2024 is expected to show a significant improvement compared to the first. Additionally, inflation is projected to decrease. While consumer prices rose by 5.9% last year, they're expected to grow at a slower pace this year, by 2.2%, and 1.7% next year.
Wollmershauser further stated, "The purchasing power of private households is expected to further strengthen throughout the year, and the overall economic recovery is expected to gain momentum in line with the normalization of the consumer conjuncture."
Global trade in goods and industrial production are expected to recuperate, particularly from the second half of the year. This recovery will be boosted by a revival of investments, which will be stimulated by the monetary policy easing in developed countries. The Ifo Institute predicts two more interest rate cuts from the European Central Bank this year, following the ECB's first rate cut since 2019 in June, which lowered the key interest rate from 4.50% to 4.25%.
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The revised growth forecast by the Ifo Institute for this year has increased from 0.2% to 0.4%, indicating a more positive outlook for economic expansion in Germany.The Ifo Institute anticipates a 1.5% growth rate for Germany in the following year, which is an improvement from the initial projections.The overall economic recovery in Germany is expected to gain momentum throughout the year, as per the Ifo Institute's forecast, in line with the normalization of the consumer conjuncture.
