Financial circumstance - German economy on a gradual road to recovery, according to DIW
The German economy, as perceived by the Research Institute DIW, is experiencing a gradual revival. The DIW's economic specialists have revised their projection for this year's economic growth from 0.1% to 0.3%. In March, they had anticipated a growth rate of 0.1%.
As per the announcement made by the German Institute for Economic Research in Berlin, a growth rate of 1.3% is predicted for the upcoming year. The German economy's development is anticipated to gather momentum consistently this year, according to the DIW. Private consumption is emerging as the key catalyst for this recovery.
In the spring, there was still doubt due to uncertainty about one's own economic situation and money was being held back. However, private households are now likely to feel more financial security. "Private consumption could become the primary driver of growth," stated Chief Economist Geraldine Dany-Knedlik of the DIW. After one-time payments in many sectors, price hikes are anticipated to come into effect, bolstering financial security and augmenting the willingness to spend. Even households with low incomes are expected to enjoy higher earnings, according to the DIW. Inflation is also on the decline.
The DIW's projections align with those of other research institutes, which unveiled their latest forecasts on Thursday. For instance, the IfW Cologne forecasts 0.2% growth this year (2025: 1.1%), while the RWI Essen predicts 0.4% (2025: 1.5%).
Read also:
Despite the concerns about the economic situation in the spring due to financial uncertainty, the German economy is currently projected to show a significant improvement. The DIW, an economic researcher based in Berlin, revised its growth prediction for this year from 0.1% to 0.3%, with private consumption serving as the main catalyst for this recovery. Additionally, other research institutes, such as IfW Cologne and RWI Essen, have also released positive growth forecasts for Germany, further indicating a positive economic outlook during a period of global recession.
