German institutes downgrade 2024 economic growth forecasts

Posted on March 8, 2024   |  

Two German forecasting institutes have revised their growth forecasts downward for 2024, posing challenges for the euro zone's largest economy.

The Ifo Institute lowered its forecast to 0.2% from 0.7%, citing weak consumption and high-interest rates, while the IfW Kiel Institute reduced its projection to 0.1% from 0.9%.

Factors such as consumer restraint, high interest rates, price increases, government austerity measures, and a sluggish global economy are dampening Germany's economic outlook, potentially leading to another winter recession.

Germany's economy contracted by 0.3% in the final quarter of 2023, with expectations of further contraction in the first quarter.

Inflation is anticipated to decrease to 2.3% in 2024 from 5.9% in the previous year and to drop to 1.6% in 2025.

Employment is expected to increase to 46.1 million in 2024 and reach a record 46.2 million in 2025, despite a temporary rise in the unemployment rate to 5.9% in 2024 before declining to 5.6% in 2025. 

Additionally, the public deficit is projected to decrease over the coming years.