Joint Economic Forecast for the German Economy #2-2024 – German Economy in Transition – Weak Economy and Growth
The study contains a detailed short-term forecast up to 2026 as well as a medium-term projection of economic development up to 2029. The main topic deals with cyclical and structural aspects of private household saving. The German economy has been treading water for over two years. A slow recovery is likely to begin in the coming quarters. However, economic growth will not be able to return to the trend seen before the COVID-19 pandemic in the foreseeable future. Decarbonisation, digitalisation, demographic change and probably also stronger competition with companies from China have triggered structural adjustment processes in Germany that are dampening the growth prospects for the German economy. Gross domestic product is likely to fall by 0.1 percent in 2024 and increase by 0.8 and 1.3 percent respectively in the next two years. The institutes are thus revising their forecast from spring 2024 slightly downwards. The sluggish recovery is being driven by rising private consumption, which is being stimulated by strong growth in real disposable income. The economic upturn in important sales markets, such as neighbouring European countries, will support German foreign trade. Together with more favourable financing conditions, this will benefit capital investment. Economic policy should reduce barriers to productivity, allow structural change and reduce political uncertainty.