Revised Government Explication on Anticipated Economic Growth
Based on a newspaper report, the German government has adjusted its economic outlook and introduced the possibility of a second consecutive year of recession in 2024. The Ministry of Economics now expects a 0.2% decrease in the GDP for this year, as reported by "Süddeutsche Zeitung".
Originally, the economic forecast for 2024 projected a 0.3% rise in GDP. Unfortunately, Germany's economic output decreased by 0.3% in the previous year. The federal government is scheduled to announce the revised estimate on Wednesday. Major financial research institutions have similar predictions, lowering their economic predictions for this year.
Economists in their recent government-published autumn report predict a 0.1% decline in GDP for 2024, marking two consecutive years of contraction. This 'joint diagnosis' serves as the basis for the federal government's new projections in October, which eventually shape the tax forecast.
Habeck remains optimistic about Germany's economy
According to "Süddeutsche Zeitung", Germany's Federal Minister of Economics, Robert Habeck, is more optimistic than before about the country's economy for the next two years. He estimates the economy to gradually recover from its current instability and exhibit a more robust performance. In 2025, he predicts a 1.1% increase in GDP, surpassing the previously predicted 1% increase.
In 2026, Habeck anticipates an increase of 1.6%. However, leading research institutes are less optimistic. They have reduced their combined forecast for 2025 from 1.4% to 0.8%, and for 2026, they predict growth of 1.3%.
Given the revised economic outlook, the German government's decision to consider a second consecutive year of recession in 2024 aligns with the economists' prediction of a 0.1% decline in GDP for that year, as outlined in their recent government-published autumn report. Despite this pessimistic view, Germany's Federal Minister of Economics, Robert Habeck, remains more optimistic, projecting a 1.1% increase in GDP for 2025, contrasting the revised estimate from the research institutes of 0.8%.
