Germany to lower its estimate of GDP growth to 0.2% in 2024

According to a source with knowledge of the situation, the German government will cut its economic growth prediction for this year in a report scheduled for release next week to just 0.2%.

The source cited two factors that contributed to the low percentage, which was far lower than the October projection of 1.3%: weak global economic growth and a verdict by the German constitutional court that severely damaged the nation's budget.

A spokesman for the Ministry of Economics stated on Tuesday night that they could not comment on the figures and that the government would do so after the official report was released.

In a second monthly report released on Wednesday, the ministry issued a warning, stating that a string of domestic strikes coupled with geopolitical concerns, particularly in the Red Sea, might further impede the anticipated recovery of the largest economy in Europe.

The economy of Germany contracted by 0.3% in 2023 as a result of high inflation, rising interest rates, and a sluggish global economy. These negative forecasts for the country's economy in 2024 follow those for 2023.

Although less bullish than the government, the Ifo and IfW economic institutes recently revised their 2024 projections. Ifo now projects 0.7% economic growth, down from 0.9% before, while the IfW is projecting 0.9% growth, up from 1.3% previously. In March, they intend to release updated forecasts.

A fresh prediction for 2025 is not expected in the report next week. This spring, the government should provide an update on its October economic growth forecast of 1.5%.

(Sources: investing.com, reuters.com)