The German economy is set to regain momentum in 2024, with stronger growth expected in the years following. The Bundesbank has released new forecasts indicating that real GDP is projected to increase by 0.3% this year, slightly lower than the previous forecast of 0.4% made in December. Output growth is expected to accelerate further, expanding by 1.1% in 2025 and 1.4% in 2026.
Bundesbank President Joachim Nagel stated that Germany’s economy is emerging from a period of weakness, driven by strong wage growth, a gradual decline in inflation, and a stable labor market. Despite challenges faced by key manufacturing sectors, Germany is showing signs of rebounding from last year’s slump. Industrial output has experienced unexpected declines, but the labor market remains resilient with unemployment holding steady at 5.9%. Companies are retaining workers due to shortages of skilled staff, leading to any economic upswing not necessarily resulting in increased hiring as companies utilize existing staff to meet demand.
The Bundesbank anticipates that private consumption will gradually increase and export business will improve in the second half of the year, driving stronger growth in industry as well. In terms of inflation, the Bundesbank raised its forecast slightly for this year, predicting consumer-price growth at 2.8%. Core inflation is projected to slow down over time
