Ifo Institute lowers forecast for German economic growth in 2024
The Ifo Institute has significantly lowered its forecast for growth in the German economy in the coming year. Gross domestic product will only increase by 0.9 percent, the Munich-based researchers predicted on Thursday. In September, they had still assumed an increase of 1.4 percent. Growth could also be even weaker, they said, with a view to the billions in savings now planned in the federal budget. A slight acceleration to 1.3 percent is expected for 2025, compared to the previous forecast of 1.2 percent.
"Growth in the last quarter of 2023 is likely to be weaker than previously thought, which will also have an impact in the coming year," said Ifo economic analyst Timo Wollmershäuser, adding: "Uncertainty is currently delaying the recovery." This is increasing consumers' propensity to save, while companies and private households are becoming less willing to invest.
In principle, however, the course is set for recovery. Wages are likely to rise sharply, while employment is higher than ever before. This means that purchasing power is returning. Interest rates are also likely to have already peaked. The rise in interest costs had hit the construction industry in particular.
The Ifo Institute expects inflation to ease. In the second half of the year, the inflation rate is likely to return to two percent, with falling energy prices in particular contributing to this. However, inflation in consumer-related services will remain well above three percent for some time to come, due to the sharp rise in wages.
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The original forecast for German economic growth in 2024 by the Ifo Institute was 1.4%, but they recently revised it down to only 0.9%. Despite this decrease, the Ifo Institute still expects a slight acceleration to 1.3% growth in 2025.
Source: www.ntv.de
