Poor economic forecast for Germany in 2024

According to the report of the international group Tasnim news agency quoting For 2024 and 2025, the Handelsblatt newspaper, the Handelsblatt Research Institute, expects the economic forecast to increase slightly, and hopes for significant growth are fading.

Accordingly, the German economy has not yet surpassed its pre-Corona level in 2019 – and will only struggle to get out of recession in the future. This is the result of the new economic forecast of the Handelsblatt Research Institute (HRI).

HRI, in its autumn forecast, expects growth for the new year to be only 0.3 percent and expects There is a 0.6% economic growth rate in 2025. That makes HRI more pessimistic than other economic research institutes, which see between 0.5 and 0.9 percent growth for 2024 and at least 1 percent growth for 2025.

“Bert Rorup”, the chief economist of the German newspaper Handelsblatt, says: After the technical stagnation in the second half of 2023, no dynamic improvement is expected in the new year either. Based on this, the growth rate of only 0.1 or 0.2 percent per quarter will probably become the new law. Ziad will end this year with a loss. It’s still a while before the final figures from the Federal Bureau of Statistics are on the table, but in almost no other year have economic researchers and industry associations disagreed so much that 2023 was a recession with a slightly negative sign. And the signs of 2024 look nothing but encouraging.

Moritz Kremer, a senior German economist at one of the country’s most important banks, in an interview with the channel “I don’t want to talk about 0.2 or minus 0, 2 percent growth. In fact, we are in recession!”

Kramer compared the steady slow growth of the German economy to a corrugated metal sheet and said: “We are moving in a kind of ‘corrugated iron economy’. It goes up and down a bit, but in fact We are lying flat on the ground.”

The reasons are well known, he said. Germans are reluctant to spend more because of inflation, and the weak global economy is putting pressure on exporters, who used to be the driving force behind the German economy. On the other hand, the ambitious transformation of Europe’s largest economy – led by Economy Minister Robert Haubeck – is costly. Tens of billions of dollars are spent annually for this work.

Furthermore, due to the still high energy prices in Germany, many international companies have canceled their investment plans. are suspended for their branches in Germany. Instead, they are creating new production capacities outside of this country and especially outside of the European Union, in the United States of America or China. Then their contribution to economic growth will be felt elsewhere than in Germany.

In mid-November, the budget ruling of Germany’s Federal Constitutional Court also created more uncertainty in between businesses and consumers. The ruling prohibited the use of unused billions from the Corona emergency package for other purposes and presented the German government with a budget challenge. Things are going very badly for Germany right now, says Bank. The government urgently needs a growth stimulus. Concerns that the government’s austerity measures could further slow growth after the Federal Constitutional Court ruling appear to have been confirmed.

According to Carsten Brzeski, chief economist of ING Bank, said the verdict revealed two new risk factors for the German economy: fiscal austerity and political uncertainty.

“DW” in He continued: Along with other factors such as the increase in interest rates, it is difficult to imagine an early end to the economic recession in Germany. Especially since there is no stimulus from government investments because the federal government must look for savings options after the court ruling. The Federal Constitutional Court has decided that the 60 billion euros initially approved as a corona loan in the 2021 budget cannot be subsequently allocated to investments in climate protection and economic renewal.

At the end of November, German Finance Minister Christian Lindner estimated the need for action” for the 2024 budget at 17 billion euros. He announced the end of some plans, including the cancellation of the plan to brake electricity and gas prices. .

The ruling threatened the Federal Constitution, especially the climate projects and industrial policy of the Minister of Economy. Shortly after this ruling was issued by Germany’s highest court, The Ministry of Economy had estimated that in the worst possible case, the consequences of this ruling could lead to half a percent less in economic growth.

After about four weeks of tough negotiations, the government Germany’s federal government recently presented a supplementary budget for 2023 that could only be saved by reactivating the debt brake retroactively. Rising energy prices threaten to fuel the recently subdued inflation again. They forecast much less than a one percent increase in Germany’s GDP for 2024, meaning the German economy is expected to grow just above zero or even shrink. The Organization of Industrialized Countries (OECD) has recently forecast an increase of 0.6% for 2024 for Germany.

In contrast, the average growth of the 38 industrialized countries in the OECD is in sight. The current economic estimate as of November 29 is 1.4 percent. In 2025, Germany is expected to remain below the average of OECD countries (1.8 percent) with 1.2 percent. The German economist says: The energy crisis affected Germany more than other countries because industry plays a more important role in this country and the dependence on Russian gas was much more than other countries.

This OECD expert says: It is necessary to solve the budget crisis as soon as possible in order to provide security and certainty planned in the future to companies and families. According to him, a solution should include reducing costs, increasing revenue and reforming the debt brake. Now, after the austerity and inflation measures presented by the federal government In the draft budget for 2024, many research institutes have once again downgraded Germany’s growth opportunities. Above all, rising carbon dioxide prices and removing subsidies for the use of electricity grids will slow new growth.

On December 14, the Ifo Institute released its economic forecast for 2024 corrected from 1.4% to only 0.9%. The Leibniz Institute for Economic Research (IWH) cut its growth forecast from 0.9 percent to 0.5 percent, and the Bundesbank cut its forecast for 2024 to 0.4 percent from 1.2 percent.

“Moritz Schulerick”, head of the Kiel Institute for the World Economy and professor of economics at the University of Science and Technology in Paris, explained to Deutsche Welle about the stressors on the German economy. Germany has made three big bets in the past decades. He added that betting on Russian gas as a source of cheap energy for the industry is a bet. On China’s economic miracle as a driver of Germany’s exports, betting on the outsourcing of national security to America.” He added: We have reached the end of a path in all three points. -container” style=”text-align:justify”>5 important challenges facing the German government in 2024