Leading German economic institutions said that high interest rates, weak global demand and political uncertainty negatively affect the prospects for the German economy. Against this background, they revised down their forecast for GDP growth for 2024 to 0.1% from 1.3%. Meanwhile, the forecast for 2025 was worsened by 0.1%, to 1.4%.
"Although the recovery is likely to begin in the spring, the overall momentum will not be too strong. In 2024, private consumption will become the most important driving force of the economy. Meanwhile, in 2025, the main driver of GDP growth will be an increase in exports," the institutes said, adding that consumer inflation in Germany is likely to fall to 2.3% in 2024 and to 1.8% next year.
In terms of the labor market outlook, the institutes forecast the unemployment rate to be 5.8% in 2024 and fall to 5.5% in 2025.