June 13, 2024

Germany’s Economic Institutes Revise GDP Outlook: Low Domestic Demand and High Gas Prices Blamed

2 min read
Economic growth forecasts for Germany lowered by experts due to economic struggles

Economic institutes in Germany have recently revised their GDP outlook for the country, citing low domestic demand and the impact of high gas and electricity prices on exports as the main reasons. The forecasts were part of the institutes’ six-monthly “collective diagnosis” of the German economy.

The initial growth forecast of 1.3% made last autumn has been reduced to just 0.1%, according to a recent report by five economic research institutes in Germany. The report emphasizes the importance of consumer purchasing power in improving the economic outlook. It notes that the German economy is currently facing challenges, with weak growth forces and economic factors contributing to sluggish overall progress.

Experts have highlighted that domestic demand has not increased as anticipated, largely due to high gas and electricity prices, which have affected the competitiveness of energy-intensive goods, an area where Germany typically excels. Additionally, the government’s strict fiscal policies, aimed at adhering to the constitutional debt brake, have limited its ability to issue new debt and support economic growth.

Despite these challenges, next year’s forecast anticipates growth to increase to 1.4%. The insights from the economic institutes, including DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen, and Ifo in Munich, provide a comprehensive analysis of the current state of the German economy and the factors influencing its performance.

Germany’s economy was once again one of the poorest performing major economies globally last year. However, experts believe that with some policy changes and strategic interventions by businesses and consumers alike, it can recover from this downturn and get back on track towards sustainable growth.

In conclusion, while Germany’s economy is facing some significant challenges at present time , experts are optimistic that with continued efforts from all stakeholders , it can overcome them and achieve sustainable growth moving forward .

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