The decline in German GDP is expected to be followed by a weak economic recovery in 2025. In 2025, the German economy will grow by 0.8% and in 2026 by 1.3%. – says the joint forecast prepared by the prestigious German economic institutions: Ifo, DIW Berlin, IfW Kiel, IWH and RWI.
Compared to the spring projections, the institutions lowered their German GDP forecasts for 2024 by 0.2% and for 2025 by 0.6%.
What problems is the German economy facing?
The German economy has been on the brink of recession for almost two years. In the second quarter, German GDP fell 0.2%. q/q (If the decline is repeated in the third quarter, Germany will officially enter a technical recession). Last year it fell 0.3%.
– In addition to the economic crisis, Germany is also experiencing the burden of structural change. Decarbonization, digitalization and demographic change, as well as increased competition from Chinese companies, have led to a process of structural adjustment that has an impact on the long-term growth prospects of the German economy, said Geraldine Dany-Knedlik, head of economic forecasting and policy at the DIW Institute Berlin.
