Germany’s Economy Forecasted to Stagnate in 2024, Despite Promising Start to the Year

Germany’s economy is forecast to stagnate in 2024, despite a promising start to the year, according to the latest predictions from the German economic institute IW. Despite some bright spots, such as an upturn in consumption due to easing inflation, the manufacturing and construction sectors are still struggling. To drive sustainable growth, investments need to increase.

However, current investment levels are depressed due to geopolitical tensions and high interest rates, making financing more expensive. Last year, Germany’s economy shrank by 0.2%, the weakest performance among major euro zone economies. IW predicts 0% growth for Europe’s largest economy this year, lagging behind countries like France, Italy, Britain, and the United States.

Germany’s unemployment rate is expected to rise to 6% on average in 2024, up from 5.7% in 2023. The economic downturn is becoming more visible on the labor market in Germany. To improve business conditions and drive growth, a policy boost is needed, according to IW economist Michael Groemling. Without changes, Germany risks losing its potential and missing out on growth opportunities. Foreign trade is also expected to remain weak this year and provide little economic stimulus.

Overall, Germany’s economic outlook for 2024 remains uncertain with challenges that need to be addressed if sustainable growth is desired.