Economic situation - Ifo Institute lowers forecast for 2024
The Ifo Institute has lowered its forecast for the German economy. After a decline of 0.3 percent in the current year, the Munich-based economists believe that gross domestic product will probably only grow by 0.9 percent in 2024 instead of the previously expected 1.4 percent.
The development in the current quarter is weaker than expected and "this will also have an impact in the coming year", said Ifo head of economic research Timo Wollmershäuser in Berlin.
Uncertainty delays recovery
Consumers are saving and companies' willingness to invest is declining, said the Ifo economic researcher. The uncertainties surrounding the federal budget were contributing to this. With a cut of 20 billion euros, the economy would only grow by 0.7 percent.
Yet the course is basically set for recovery: Wages are rising strongly and employment is higher than ever before, said Wollmershäuser. Inflation is slowing down, with inflation likely to fall from around six percent this year to a good two percent next year. Interest rates have passed their peak. Purchasing power is returning and overall economic demand should pick up again. The Ifo Institute expects economic growth of 1.3 percent in 2025.
In terms of unemployment, the economic researchers expect an increase of 191,000 people this year and a further 82,000 next year. The unemployment rate would then rise to 5.9 percent. The number of people in employment is likely to increase by 353,000 this year and by 83,000 next year.
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Source: www.stern.de
