Economic growth for Germany cut by experts

Germany’s Economic Recovery Slowed: Experts Call for Boost in Consumer Purchasing Power

The German economy is facing challenges, according to a report by five leading economic research institutes. These institutes have lowered their GDP forecast from 1.3% to 0.1%, citing factors such as low domestic demand and high gas and electricity prices impacting exports. The report highlights the importance of consumer purchasing power in improving the economic outlook.

While the German economy is experiencing weakness with growth forces dwindling, experts expect a recovery to start in the spring. However, the momentum is not anticipated to be significant. Domestic demand did not rise as projected, partly due to high energy prices making energy-intensive goods less competitive, despite being a strength of the German economy.

Another factor affecting the German economy is the government’s strict fiscal policy, which is preparing to adhere to the constitutional debt brake regulations limiting new debt issuance. As a result, Germany had the lowest-performing major economy worldwide last year. Nonetheless, growth is expected to improve in the coming year, with a forecast predicting a 1.4% increase. The collaborative report was compiled by the DIW in Berlin, the IfW in Kiel, the IWH in Halle, the RWI in Essen, and the Ifo in Munich.

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