Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

German economy in stormy waters as government slashes forecast

by Staff GBAF Publications Ltd
0 comment

German economy in stormy waters as government slashes forecast

By Christian Kraemer and Rachel More

BERLIN (Reuters) -The German government expects the economy to grow 0.2% this year, far less than a previously forecast 1.3%, as weak global demand, geopolitical uncertainty and persistently high inflation dent hopes for a swift rebound.

The revised forecast was approved by the cabinet on Wednesday as part of the government’s annual economic report, government sources said. Economy Minister Robert Habeck is scheduled to give details later in the day.

Europe’s largest economy shrank by 0.3% in 2023 and is broadly expected to enter another technical recession in the first quarter of this year.

“The German economy continues to find itself in difficult waters at the beginning of the year,” said a draft of the report seen by Reuters.

It listed high inflation and a resulting loss of purchasing power among the challenges, as well as geopolitical crises and interest rate hikes.

Germany’s economic advisers plan to follow the federal government’s lead and reduce their forecast for economic growth in 2024, adviser Ulrike Malmendier told Reuters in an interview.

“I think we will definitely be going in the same direction… that is what our numbers are indicating,” Malmendier said.

The November forecast of the council of advisers to the government estimated growth would hit just 0.7% in 2024. The next official update is due in mid-May.

The gloomy outlook for Germany comes amid concerns over its status as an industry location, as the government tries to reconcile its strict fiscal rules with the need to attract investment and help fund a costly green transition.

The draft government report points to a “normalisation” of fiscal policy in 2024, after a constitutional court ruling forced the coalition to make painful cuts in its 2024 budget.

The government is also expected to forecast an easing in inflation on Wednesday, from 5.9% in 2023 to 2.8% this year.

(Reporting by Christian Kraemer and Rene Wagner; Additional reporting by Reinhard Becker; Writing by Rachel More and Victoria Waldersee; Editing by Nick Macfie and Madeline Chambers)