Five major economic research institutes in Germany have recently revised their GDP outlook for the country, citing low domestic demand and high energy prices as the main factors. The report, which is part of the institutes’ six-monthly “collective diagnosis” of the German economy, has downgraded the initial growth forecast of 1.3% made last autumn to just 0.1%.
The experts emphasize that consumer purchasing power is crucial in improving the economic outlook for Germany. They note that weak growth forces and economic factors are currently hindering sluggish overall progress in the country.
Experts highlight that domestic demand has not increased as expected due to high gas and electricity prices, which have affected the competitiveness of energy-intensive goods – an area where Germany typically excels. Additionally, the government’s strict fiscal policies aimed at adhering to the constitutional debt brake have limited its ability to issue new debt and support economic growth.
Despite these challenges, next year’s forecast anticipates a slight increase in growth to 1.4%. The insights from five major economic research institutes – DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen, and Ifo in Munich – provide a comprehensive analysis of the current state of the German economy and the factors influencing its performance.
