Economic Think Tanks in Germany Downgrade GDP Outlook, Cite Declining Growth Forces and High Energy Prices

Economic Growth in Germany Hindered by Experts.

A group of leading economic think tanks in Germany has released a report downgrading their GDP outlook for the country. The five research institutes collectively revised their previous growth forecast from 1.3% to just 0.1%, citing declining growth forces and high energy prices impacting exports as the main factors contributing to sluggish overall economic development.

The report highlighted the importance of consumer purchasing power in improving the economic outlook. However, despite a recovery expected to begin in the spring, experts cautioned that momentum may not be significant due to overlapping economic and structural factors. High energy prices have affected the competitiveness of energy-intensive goods, a key strength of the German economy.

Furthermore, Germany’s economy is facing challenges due to a sharp tightening of fiscal policy by the government in preparation for the return of the constitutional debt brake, which restricts the issuance of new debt. As a result, Germany was the worst-performing major economy in the world last year. However, projections for next year anticipate growth picking up to 1.4%.

The “diagnosis” was compiled by five prominent German economic research institutes, including DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen and Ifo in Munich.

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