The federal government’s economic advisory committee has significantly lowered its forecast for 2024. The so-called economists only expect growth of 0.2 percent for 2024.
The so-called economists have lowered their economic forecast for this year. As the Federal Government’s advisory committee announced, an increase in gross domestic product of only 0.2 percent is expected. Last fall, economists had forecast growth of 0.7 percent.
The development of the German economy is characterized by weak overall economic demand, said the Council of Experts for the Assessment of Overall Economic Development. “Private households are currently still consuming cautiously, industry and the construction sector are only recording a small amount of new orders,” said council member Martin Werding.
The previous reports from the expert group focused primarily on the energy crisis and its consequences. However, the “economic wise men” had already made it clear in the fall that they considered structural problems in Germany to be more serious, such as the shortage of skilled workers and the neglected infrastructure. “The trend has been confirmed and strengthened,” said Werding, explaining the adjustment.
Also prognosis of the Federal Government behave
The federal government is also only expecting mini-growth of 0.3 percent this year. Among other things, she pointed out that the global economy had not yet really gotten going again.
A forecast by the EU Commission comes to a similar conclusion: the German economy will grow more slowly this year than previously expected. In an estimate presented today by the Brussels authority, it predicts that the EU’s largest economy will only see minimal growth of 0.1 percent in 2024.
In the course of 2024, the “economists” expect the economy to pick up speed. “We expect a subdued but stable year, which will continue next year,” it said. The experts forecast growth of 0.9 percent for 2025. Private consumption is expected to begin to support the economy over the course of the year, as real incomes are expected to rise significantly.
When it comes to inflation, the “economists” are assuming a rate of 2.4 percent this year and 2.1 percent next year. “The good news is that energy prices are not driving inflation,” said member Ulrike Malmendier. The Council expects better financing conditions in 2024. The reason for this is an expected interest rate cut by the European Central Bank (ECB).
Bad Transport infrastructure in Germany
The “economic wise men” today criticized the existing transport infrastructure in Germany. The poor condition is increasingly leading to traffic jams on motorways and low reliability in rail transport. This affects freight transport and economic activity, according to the report.
“The transport infrastructure in Germany must be modernized and expanded,” said “Wirtschaftsweise” Monika Schnitzer. This requires higher expenditure and more planning security. The “economic wise men” suggest a car toll as a financing option. Since heavy vehicles put more wear and tear on the infrastructure than light vehicles, a differentiation based on weight would make sense.
Expansion of the infrastructure for electric trucks
According to the report, the existing truck toll contributes significantly to covering the federal government’s transport expenses. Freight transport also needs to be decarbonized, according to the Council of Experts. According to experts, it currently accounts for eight percent of greenhouse gas emissions in Germany.
The experts have therefore called on the federal government to tackle the development of a comprehensive charging infrastructure for electric trucks. Battery-electric trucks could already contribute to reducing emissions today, but other low-emission drives “do not have the same market maturity,” explained the economic advisory committee. However, there was no agreement in the advisory committee about prioritizing battery-electric trucks. The “economic method” Veronika Grimm said that the prioritization was not enough.
The Council of Experts for the Assessment of Overall Economic Development is a body that provides economic policy advice. It consists of five experts. The council was established by law in 1963 to independently assess Germany’s overall economic development.