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The German economy is not coming out of stagnation

2024-09-27 09:17:43, Kosova & Bota CNA
The German economy is not coming out of stagnation
Illustrative photo

The most popular German economic research institutes have jointly presented the business forecast. They expect weak economic development in Germany. According to their forecast, the total gross production in the following year will decrease by 0.1%. In the spring they had predicted a plus of 0.1% and concluded that "the economy in Germany is weakened."

A slight improvement is expected in 2025, a plus of 0.8%, but in the spring the institutes had calculated a plus of 1.4%. Based on the forecasts so far, an economic growth of 1.3% is expected in 2026.

Structural change and competition from China

The economic downturn in Germany has been going on for a long time. In 2023, the largest European economy shrank by 0.3%. "In addition to the cyclical weakening, the German economy is also burdened by the structural transformation", quotes the portal tagesschau Geraldine Dany-Knedlik, head of the department "Forecast and Economic Policy" at the German Institute of Economics, DIW. "Decarbonisation, digitalisation, demographic change and also stronger competition with companies in China have set in motion structural regulatory processes that reduce the growth prospects of the German economy."

The German economy is not coming out of stagnation
German economic institutes give the forecast for spring 2024. Photo: Kay Nietfeld/dpa/picture alliance

Criticism of the German government's economic growth package

The federal government plans an economic growth package due to the weakening economy. However, the measures are not enough for powerful business associations. They demand fundamental reforms and complain about high energy prices compared to international standards, but also excessive bureaucracy and a lack of qualified workers.

The joint economic forecast was prepared by DIW, the Ifo Institute, the Kiel Institute for the World Economy, the Leibniz Institute for Economic Research, Halle and the RWI - Leibniz Institute for Economic Research Essen. It serves the federal government as guidance for its forecasts in October, which are taken as a basis for the assessment of tax revenues./ DW





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