Germany's economy is experiencing gradual recovery, according to DIW.
Following the 2023 recession, economic specialists anticipate a revival in the financial situation. The Research Institute DIW has slightly altered its prediction for growth in the present year. Private consumption is anticipated to lead the rebound.
The Research Institute DIW's assessment suggests that the German economy is regaining traction. The DIW's economic specialists have amended their prediction for economic growth in the current year to 0.3 percent. In March, they forecasted 0.1 percent. For next year, they anticipate growth of 1.3 percent, as per the German Institute for Economic Research in Berlin.
According to the DIW, the economic progress is anticipated to develop a consistent pace this year. Private consumption is set to become the primary motor behind recovery. In the spring, private households faced a tightening of their financial situation due to ongoing uncertainty about their economic condition. Nonetheless, private households are now predicted to have a higher feeling of income security.
"For private consumption, all indicators point to green, implying it could become the leading driver of growth," stated DIW Chief Economist Geraldine Dany-Knedlik. After one-time payments in various industries, tariff increases are expected to take effect, which would enhance income security and boost the appetite for consumption.
Even low-income households are predicted to have higher incomes, as per the DIW. Inflation rates are also anticipated to decrease. The DIW's projections align with those of other research institutes that released their most recent forecasts on Thursday. For instance, the IfW Cologne anticipates 0.2 percent growth in this year (2025: 1.1 percent), and the RWI Essen forecasts 0.4 percent growth (2025: 1.5 percent).
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The DIW's economic forecasts for the current year have been revised upwards, now predicting a 0.3% growth. Despite facing financial uncertainty earlier, private households are now expected to have a higher sense of income security, contributing to economic growth. Berlin-based institution the German Institute for Economic Research shares a similar outlook, predicting a 1.3% growth for the next year.
The prolonged economic recovery in Germany, as indicated by DIW, is expected to drive consistent economic growth this year. Private consumption, having initially tightened due to financial uncertainty, will now lead the economic rebound, fueled by increased income security and rising consumer appetite.
Economic specialists anticipate that the improvements in the economic situation will lower inflation rates, thereby benefiting both low-income households and the broader economy, as suggested by the DIW's economic outlook.
