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Germany’s top economic advisory body, the Council of Economic Experts, on Wednesday slashed its growth forecast for 2024, as the country is once again expected to be among the worst-performing economies in the EU.
Germany, the world’s fourth-largest economy, was hit particularly hard by the difficulties since Russia’s attack on Ukraine in 2022. With annual GDP shrinking by 0.3%, Germany was the worst-performing major economy in 2023.
In line with other recent forecasts, the German government’s top economic advisory body, the Council of Economic Experts, has now confirmed that Germany’s recovery will be slower than expected.
“The German Council of Economic Experts is forecasting a growth rate of 0.2% for gross domestic product this year and 0.9% next year. These are bad figures,” Martin Werding, one of the body’s five members, told reporters.
The group had previously forecast growth of 0.7% in 2024.
In the short term, the experts point to weak consumption as the main problem after a year of economic hardship, with rising inflation and energy costs also hitting Germany’s manufacturing sector.
However, the top economic advisory body has previously made it clear that Germany also suffers from long-term structural problems such as a lack of investment and an ageing population.
Germany’s ageing economy worries top advisors
Germany’s ageing population and rapidly outdating economic structures are putting its future growth at risk, the country’s top economic advisors warned on Wednesday, stressing that it must also draw in more private capital from other European countries.
Plagued by soaring energy …
The advisors’ forecast is in line with that of the European Commission, also presented on Wednesday, which predicts German growth at 0.1% in 2024.
This would again put Germany back at the bottom of the pile, ahead of only Finland (0%) and Estonia (-0.5%).
However, the Council of Economic Experts saw “positive aspects in the details”, including an expected boost from the European Central Bank (ECB).
“Like many other market participants, we expect the ECB to cut interest rates again in 2024,” said Ulrike Malmendier, another member of the Council.
This was due to receding inflation, she said, adding that rate cuts would make investment conditions “more favourable”.
(Nick Alipour | Euractiv.de)
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