Germany’s Economy Slows Down: Reforms Can’t Revive Failing Growth Forces

German economic institutes reduce 2024 growth forecast to 0.1% – DW – 03/27/2024

A group of top economic think tanks released their latest analysis of the German economy for early 2024 on Wednesday. Titled “German Economy Faces Challenges: Reforming the Debt Brake is Not Enough,” the report revised the growth forecast from 1.2% to near stagnation, at 0.1% for the year. The summary stated that Germany’s economy is struggling due to a phase of economic weakness and dwindling growth forces. Both economic and structural factors are contributing to the sluggish overall economic development.

The report emphasized that consumers and their recovering purchasing power, as inflation sinks and wages rise in many sectors, would be the most important fuel for the economic recovery. The collective diagnosis was a joint effort by leading German economic institutes including DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen, and Ifo in Munich. Additionally, the German government also revised its economic forecasts downwards, warning of the likelihood of entering a technical recession by the end of the first quarter of 2024. German GDP contracted by 0.3% year-on-year in the last quarter of 2023, meeting the criteria for a technical recession with two consecutive quarters of negative growth.

One significant factor contributing to these challenges has been frequent strikes impacting transportation networks and air travel in Germany. However, an agreement was reached earlier this week between Deutsche Bahn and GDL train drivers’ union after months of negotiations on one major labor dispute affecting rail transport workers.

Despite these challenges, however,

Leave a Reply