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Ekonomické zprávy

Ifo Institute has revised its forecast for German economic growth for the current year

Germany's Ifo Institute said weak consumption and high interest rates continue to put pressure on the eurozone's largest economy. Against this background, experts lowered their forecast for GDP growth for 2024 by 0.5%, to 0.2%. However, the forecast for 2025 has been improved to 1.5% from 1.3%.

According to official data, the economy shrank by 0.3% in 2023, recording the first annual economic slump since the COVID pandemic began in 2020. Germany greatly suffered from persistently high inflation throughout the year, along with mounting interest rates. Weakening international trade due to a slowdown in the world economy has also left the German economy.

"Consumer restraint, high interest rates and rising prices, government austerity measures and the weakness of the global economy have a negative impact on the German economy," the Ifo Institute said, adding that German GDP is likely to contract again in the 1st quarter of 2024.

As for the inflation outlook, the Ifo Institute predicts that consumer price growth will slow to 2.3% this year (from 5.9% in 2023) and decrease to 1.6% in 2025. In addition, the unemployment rate is expected to rise to 5.9% in 2024 from 5.7% last year, and then fall to 5.6% in 2025.

Today, Germany's IfW Kiel economic institute also revised its forecast for GDP growth. He now expects the economy to expand by just 0.1% in 2024 (previous forecast: +0.9%), but GDP growth is likely to accelerate to 1.2% in 2025. The institute adds that economic output is expected to stagnate in the first half of this year.

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