Lowered predictions for economic expansion are on the horizon.
The top financial organizations of the nation have revised their predictions for economic progress yet again. Instead of a modest increase of 0.1%, they now anticipate a minor drop of 0.1% in the country's GDP (Gross Domestic Product) in this very year, as per their joint statement released on Thursday. The projected recovery in the forthcoming year is also expected to be sluggish, commencing with a moderate growth of only 0.8%.
As per Geraldine Dany-Knedlik from the Berlin-based German Institute for Economic Research (DIW), "apart from the cyclical weakness, the structural transformation is weighing down the German economy." She further clarified, "matters like decarbonization, digitalization, demographic shift, and perhaps even the intensified competition from Chinese corporations have incited structural readjustment processes that are reducing the German economy's growth potential." A year earlier, Germany's GDP had already dipped by 0.1%, taking into account price and calendar variations.
As per the institutes, the industrial sector is receiving the brunt of this unfavorable situation, particularly the investment and energy-intensive sectors. According to them, "their competitiveness is hampered by the escalating energy costs and the escalating competition from high-quality industrial products from China, which are driving out German exports globally." Consequently, investments remain disappointingly low.
The financial institutions now forecast a minor decline in the country's GDP due to the revised predictions, differing from their initial anticipation of a modest increase. Due to structural transformation processes such as decarbonization and digitalization, the German economy's growth potential may continue to decrease, as suggested by Geraldine Dany-Knedlik.
