German Economy: 2024-2025 Estimates Revised Downward

The German economy, which has lagged for years, will not be able to take off even in 2024. A pool of Germany’s major centers for economic analysis, including the Munich Institute for Economic Research (IFO), the German Institute for Economic Research in Berlin (DIW), and the Institute for the World Economy in Kiel (IfW) published a consensus forecast, downgrading Germany’s economic growth projections to a paltry 0.1 percent from the previously modest 1.3% still estimated for fall 2023. The forecast for 2025 growth estimate was revised downward from 1.5% to 1.4%. The study was commissioned by Robert Habeck, Minister of Economic and Environmental Affairs.

These not very encouraging estimates were published in advance by the German press. They will be formally presented at a meeting of Olaf Scholz’s government on March 27, to be used by the German government thereafter as “the basis for the federal government’s forecasts on the current situation and prospects for the German economy.”

Despite these “gloomy” forecasts, the confidence index of German exporting companies, also developed by the Institute for Economic Research in Munich, rose in March to a level of “minus 1.4 points” from the previous reading of “minus 7 points” recorded in February 2024. In a commentary accompanying the report, Klaus Wohlrabe, deputy director of the IFO Institute, wrote that “global trade is expected to recover in the coming months, and German export-led businesses will have to take advantage of this.”