Germany’s Economic Headwinds: A Downward Revision from the IFW

By Eleanor Harrison Mar27,2024
Institute Decreases Forecasts for German Economy Due to Struggle

The Kiel Institute for the World Economy (IfW) has recently revised its economic forecast for Germany, citing challenges from both domestic and international factors. According to Stefan Kooths from the IFW, the German economy is facing headwinds, with growth expected to be only 0.1% this year, a significant decrease from previous expectations of 1.3%.

In 2023, Germany’s economic output fell by 0.3%, and productivity in the country has been stagnant. This is due to slower private consumption, declining exports despite global economic growth, and a struggling construction industry. Despite a slight recovery in the spring, overall momentum is expected to remain weak.

Political uncertainty is also a factor affecting the economy as the government struggles to finalize a growth package. The German Chamber of Industry and Commerce has echoed these concerns, pointing to high energy costs, a shortage of skilled labor, and geopolitical uncertainties impacting export business.

On a positive note, experts predict that the phase of very high inflation rates experienced since the middle of last year may be over. Consumer prices are expected to rise by 2.3% this year and by 1.8% next year, providing some relief for consumers. Despite these challenges, the institute has left its forecast for next year virtually unchanged at 1.4%.

By Eleanor Harrison

As a content writer at newseasoning.com, I infuse flavor into words, crafting compelling stories that captivate and inform our audience. With a keen eye for detail and a passion for creativity, I strive to create content that not only engages but also inspires. Whether I'm concocting a savory blog post or whipping up a spicy product description, I pour my heart and soul into every piece I write. Join me on this flavorful journey as we explore the tantalizing world of content creation together.

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