The Ifo Institute has again lowered its growth forecast for this year. After the decline in gross domestic product last year, Munich economic researchers only expect economic growth of 0.2 percent this year.
In December they had expected 0.9 percent and in January 0.7 percent. “Consumption restraint, high interest rates and price increases, the government’s austerity measures and the weak global economy are currently dampening the economy in Germany and are leading to another winter recession,” said Ifo economics chief Timo Wollmershäuser on Thursday.
However, with falling interest rates, lower inflation and increasing purchasing power for consumers, economic performance will accelerate in the middle of the year. For the coming year, the Ifo Institute increased its growth forecast by 0.2 points to 1.5 percent.
According to the experts at the Kiel Institute for the World Economy (IfW), Germany’s path out of the economic slump is also lengthening. According to the latest forecast, a recovery will only appear after spring. Economic output is likely to shrink in the winter half of the year and will hardly be more than stagnant with an increase of 0.1 percent in 2024 as a whole. On Wednesday, the IfW Kiel significantly revised its expectations from the winter forecast downwards by 0.8 percentage points.
Reasons: Private consumption and exports are recovering later or less dynamically, and investments are also extremely weak. For 2025, the IfW Kiel is leaving its forecast unchanged and sees economic output growing at 1.2 percent. The inflation rate is expected to fall to less than 2 percent and the state’s financing deficit to less than 0.8 percent. (dpa)