German economy to decrease by 0.2% in 2024 – forecast

Germany’s economy is expected to shrink by 0.2% this year. This was announced by a spokesman for the Ministry of Economy, Reuters reports.

The German government is lowering its forecast to an inflation-adjusted contraction from a previous estimate of 0.3% growth in 2024. This will be the second consecutive year of decline in Europe’s largest economy – in 2023, Germany’s GDP fell by 0.3% y/y.

At the end of September, the country’s leading economic institutes (Ifo, DIW, IWH, IfW and RWI) downgraded their forecasts for 2024. In their fall joint assessment, they expressed expectations that the country’s economy would decreased by 0.1% in the period. The Ministry of Economy has incorporated these joint estimates into its own forecasts, which are due to be published shortly.

At the same time, as the country’s Finance Minister Christian Lindner explained before the Eurogroup meeting, Germany’s economic model is not broken, but Europe’s largest economy has lost competitiveness over the past decade.

“We cannot be satisfied with Germany’s economic development,” he said.

According to Lindner, the government is introducing supply-side measures to try to get the economy back on track. After these reforms, Germany will become more competitive again, he said. The finance minister added that the initiative to stimulate growth is only the first step towards an economic turnaround, but it needs to be developed.

Germany needs additional private and public investment of €1.4 trillion by 2030 to remain competitive internationally. This is stated in a study published by the BDI business association. As noted, about 20% of industrial value creation in the country is at risk.