Significantly alters its perspective in a substantial manner, as stated by IfW.
The Kiel Institute for Global Economics (IGW) ispredicting a shrinking economy again this year. Researchers have significantly adjusted their economic forecast, predicting a 0.1% decrease in GDP, as announced on Wednesday. In the summer, the institute had anticipated a slight growth of 0.2%. The outlook for 2025 has also worsened.
According to ifW chief economist Stefan Kooths, the optimistic signs provided by leading indicators in the summer have failed to materialize. This year, the economy is being negatively impacted by weak consumer spending, with households choosing to save despite experiencing higher real incomes. Furthermore, industry and construction sectors are "sliding deeper into recession."
For the upcoming year, the institute has also downgraded its forecast: the predicted growth has been decreased from 1.1% to a modest 0.5% increase. The German economy is expected to regain some strength due to rising incomes, increased foreign demand, and decreasing interest rates. Temporary unemployment may rise to 6.1%, and inflation will "slowly decrease to 2%."
In the year 2026, the ifW anticipates a 1.1% economic growth in a preliminary estimate. However, 0.3 percentage points of this projected growth are attributed to the above-average number of working days.
After significantly adjusting their economic forecast, the Kiel Institute for Global Economics now predicts a 0.1% decrease in GDP for the economic outlook for the year. The negative impact of weak consumer spending and recession in the industry and construction sectors has led to this downgraded forecast.
