Recession in Germany also likely in the coming year
The pro-employer Institute of the German Economy (IW) believes that Germany will remain in recession in the coming year. Gross domestic product (GDP) will fall by "almost half a percent" in 2024, according to the latest economic forecast presented on Wednesday. For this year, the IW expects a decline of half a percent.
"For the German economy, 2024 could actually have been the year of recovery," says the IW. However, the general conditions remain poor. The weeks-long dispute over the federal budget in particular has unsettled companies, with many postponing their investment decisions.
In addition, the geopolitical situation remains uncertain - global trade is only expected to grow by one percent in 2024. The export-oriented German economy is suffering as a result.
The IW estimates that industry will stagnate for the fourth year in a row in 2024. Companies have been receiving fewer orders from abroad for the past two years - many are therefore holding back on investments.
Construction activity this year was below the 2019 level - due to high interest rates and high costs. As the IW researchers do not expect interest rates to fall, they also anticipate a weak year for the construction industry in 2024.
In the service economy, on the other hand, "things are looking up gently", according to the IW. This is because inflation will no longer rise above three percent in 2024 and private households will have a little more money in their pockets again.
According to the IW's model calculations, unemployment is expected to rise to six percent.
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Despite the IW's hope for recovery in 2024, Germany's pro-employer Institute predicts a recession, with GDP expected to decrease by almost half a percent. This recession projection follows the Institute's belief that Germany has been in recession throughout the year, as indicated in their April economic forecast.
Given the geopolitical uncertainty and the predicted one percent growth in global trade, the export-oriented German economy is expected to struggle in 2024, according to the IW.
Source: www.ntv.de
