The IMF is confident that Germany can achieve increased economic growth in the future.
The IMF predicts that Germany's economic growth will significantly improve in the next two years, with a possible increase of up to 1.5%. In 2022, the economy shrank. The IMF anticipates a meager growth of 0.2% this year, positioning Germany as the laggard among significant Western industrial countries.
The IMF expects growing incomes, substantially lower inflation rates, and consequently higher private consumption to boost confidence and further stimulate consumption in 2025. Germany's country report notes that increasing public investment and lessening bureaucracy are also necessary. Additionally, more robust economic cooperation in Europe, such as via a capital market union, is needed.
Nonetheless, Germany faces continuing challenges: an aging population, inadequate productivity growth, and the shift toward greater climate protection.
According to the IMF, the German government should increase public investment and lessen bureaucracy. They should also create more childcare spots to encourage more women to join the workforce due to a skill shortage. Stronger economic cooperation in Europe, like through a capital market union, is also vital.
The IMF insisted that to execute many of these measures, more government funding is necessary. To this end, the Monetary Fund suggested reforming the debt brake once more. Relaxing the deficit limit by approximately one percentage point of GDP would generate enough room for public investment and simultaneously keep the debt ratio declining.
Nevertheless, these adjustments alone would not be sufficient to address the rising expenditure requirements. The IMF also proposed that Germany eliminate detrimental subsidies and tax incentives, plus readjust the retirement age to rising life expectancy.
Read also:
- Year of climate records: extreme is the new normal
- Precautionary arrests show Islamist terror threat
- UN vote urges Israel to ceasefire
- SPD rules out budget resolution before the end of the year
The IMF suggests that lower inflation rates in Germany, partly due to growing incomes and higher private consumption, could contribute to stronger economic growth in the future. Following the IMF's recommendations, a potential decrease in the inflation rate could help lower the interest rates, making it easier for businesses and consumers to take loans, thereby further boosting economic growth.
Source: www.ntv.de
