HWWI expects weak economic growth until 2025

Economic situation - HWWI expects weak economic growth until 2025

The Hamburg Institute of International Economics (HWWI) expects the German economy to stagnate for a long time. The institute has slightly raised its forecast for the end of the year and now expects gross domestic product to fall by 0.3 percent, according to the HWWI.

"The expected savings in the state budget following the Federal Constitutional Court ruling are likely to slow down the real recovery in the coming year," the forecast states. The HWWI has therefore reduced its growth forecast for 2024 by half a percentage point to 0.5%. Only in 2025, if there are no further setbacks, is a somewhat more significant increase in economic output of one percent to be expected.

The HWWI also expects only a gradual improvement in inflation. "It will only approach the two percent mark again in the course of 2025," say the Hamburg-based economists. Inflation has already fallen significantly from more than 8 percent at the beginning of the year to 3.2 percent recently. "However, the noticeable rise in labor costs will slow down the further disinflation process." After an average annual inflation rate of 6 percent this year, the HWWI therefore expects an average inflation rate of around 2.75 percent in 2024.

According to the HWWI, all forecasts are subject to the proviso that the Middle East conflict and other geopolitical crises do not escalate further. "Otherwise, especially in view of the relatively weak global economy at the moment, a global economic crisis similar to previous such phases would have to be expected."

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1. The Hamburg World Economic Institute, located in Germany, shares concerns about the global economy's current state.
2. Despite a slight improvement in the German economy's projected GDP, the Hamburg Institute of International Economics (HWWI) still anticipates weak growth until 2025.
3. The world economic institute's forecast for inflation in Germany suggests a gradual improvement, with inflation approaching 2% by 2025, but elevated labor costs could slow down the disinflation process.
4. The HWWI's forecasts for the German economy rely on the assumption that geopolitical crises, such as the Middle East conflict, do not escalate further and negatively impact the already weak global economy.

Source: www.stern.de