The economy in Germany is weakening. According to media reports, the federal government is now assuming a decline in economic output this year. However, an improvement in prices is in sight.
In view of inflation and the weakening global economy, the federal government is expecting a slight recession in Germany this year. A decline in economic output of 0.4 percent compared to 2022 is expected. This was reported by the “Handelsblatt” and the dpa news agency, citing government circles.
The federal government therefore assumes that the economy will recover somewhat in the coming years. Economic growth of 1.3 percent is expected for 2024 and 1.5 percent for 2025.
Inflation expected to fall next year
At the same time, the federal government expects a significant decline in inflation for 2024. After inflation of around six percent this year, inflation of only 2.6 percent is forecast for next year. Energy prices stabilized – albeit at a higher level, it was said.
The reasons for the expected decline in gross domestic product (GDP) this year are energy prices, which are only gradually falling among consumers, comparatively high inflation rates and the weakening global economy, which is particularly affecting Germany as an export nation. The loss of purchasing power would have led to consumer uncertainty. Private consumption is an important pillar of the German economy.
Economics Minister Robert Habeck wants to present the forecast next Wednesday.