• Sun. May 26th, 2024

Sluggish German Economy: Reforms Fail to Boost Growth in 2024

BySamantha Jones

Mar 27, 2024
German economic institutes reduce 2024 growth forecast to 0.1%

The German economy is currently struggling with a phase of economic weakness persisting and growth forces dwindling. A group of leading economic think tanks released their six-monthly “collective diagnosis” of the German economy for early 2024 on Wednesday, titled “German economy ailing — reforming the debt brake is no cure-all.” The report revised 2024 growth forecast down from 1.2% to near-stagnation, at 0.1% for the year.

Both economic and structural factors are overlapping, contributing to the sluggish overall economic development. Consumers and their recovering purchasing power, as inflation sinks and wages rise in many sectors, will be crucial for the economic recovery. However, frequent strikes impacting the rail network and air travel in Germany have led to canceled flights and trains, with knock-on effects for other sectors.

The German government, in collaboration with leading economic institutes including the DIW in Berlin, the IfW in Kiel, the IWH in Halle, the RWI in Essen, and Ifo in Munich, also revised its economic forecasts downwards. There is a warning of the likelihood of entering a technical recession by the end of the first quarter of 2024 following a 0.3% year-on-year contraction in German GDP in the last quarter of 2023. Despite these challenges, there are hopes for a return to slight growth as consumers regain purchasing power and reforms are implemented to address economic weaknesses.

In summary, while there is hope for an improvement soon, it will not be “all that great.”

By Samantha Jones

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