• Sat. May 25th, 2024

Germany’s Economic Forecast: Low Domestic Demand and High Energy Prices Cut Growth Prediction by Half

BySamantha Nguyen

Mar 28, 2024
Economic Growth Forecast for Germany Reduced by Experts due to Weakness

In Germany, five economic research institutes have revised their GDP growth forecast, citing reasons such as low domestic demand and high gas and electricity prices affecting exports. These institutes released their six-monthly “collective diagnosis” of the German economy, downgrading the growth forecast from 1.3% to 0.1%. The report emphasized the importance of consumers’ purchasing power in improving the economic outlook.

According to experts, Germany’s economy is facing challenges, with a prolonged period of economic weakness and dwindling growth forces. Structural factors and sluggish overall economic development were highlighted as contributing to this weakness. Despite a potential recovery in the spring, the report suggested that the overall momentum might not be significant.

One of the factors impacting Germany’s economy is a lack of increase in domestic demand due to high gas and electricity prices. These prices have caused a loss of competitiveness for energy-intensive goods, which are a strength of Germany’s exports. Additionally, the government’s strict fiscal policy has limited the issuance of new debt due to provisions for the constitutional debt brake.

Germany’s economy was notably one of the worst performing major economies in Europe last year, according to recent data from Germany’s Federal Statistical Office (Destatis). The forecast for next year predicts that growth will pick up slightly to 1.4%, but experts warn that it may not be enough to overcome long-term structural challenges facing Germany’s economy.

The “diagnosis” was a collaborative effort from five prominent economic research institutes in Germany: DIW Berlin, IfW Kiel, IWH Halle, RWI Essen and Ifo Munich.

Overall, experts believe that addressing structural issues and stimulating consumer spending will be key factors in improving Germany’s economic outlook moving forward.

In conclusion, despite some positive signs in recent months such as lower unemployment rates and increased industrial production figures for certain sectors like machinery construction or chemicals manufacturing industries; there are still many challenges ahead for

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

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