Germany’s economic prospects for 2024 are looking bleak, with growth projected to stagnate and fall behind its European counterparts, according to the German economic institute IW. The manufacturing and construction sectors are still in recession, with consumption being the only bright spot as it increases with easing inflation.
Despite a stronger start to the year, investments remain depressed due to geopolitical tensions and high interest rates. This has created significant gaps in investment, hindering any potential upswing in the economy. Last year, Germany’s economy shrank by 0.2%, making it the weakest among major eurozone economies.
IW forecasts no growth for Germany this year, trailing behind countries such as France, Italy, Britain, and the United States. While the government predicts a 0.3% GDP growth rate, there is a need for policy changes to improve business conditions and unleash the country’s full potential for growth.
Foreign trade is expected to remain weak, providing little economic stimulus, while Germany’s unemployment rate is likely to increase to an average of 6% for the year. Despite record employment levels, the effects of economic weakness are becoming increasingly visible in the labor market.
In conclusion, Germany’s economy faces significant challenges in 2024 with stagnant growth prospects, low investment levels and a struggling labor market. Urgent policy changes are needed to boost business conditions and unlock the country’s full potential for growth.
