The economy in Germany will not recover so quickly: Economics Minister Habeck only expects growth of 0.2 percent this year. “We cannot continue like this,” he warned.
Federal Minister of Economics Robert Habeck is very concerned about the situation in the German economy. The Green politician announced in Leipzig that the federal government would significantly lower its economic forecast for this year. Economic growth of only 0.2 percent is expected. This is “dramatically bad,” says Habeck. “We can’t continue like this.”
“We have to invest more again”
Habeck also cited the consequences of the Federal Constitutional Court’s budget ruling as the reason for lowering the forecast. This means that people would have less money to invest because the government had to let the energy price brakes expire at the end of 2023 due to austerity constraints.
“Overall, we need to invest more in this country and get economic growth going,” said the Green politician at a craft policy forum at the start of a three-day country tour.
Numbers from the fall became unrealistic
Habeck will present the annual economic report next week. In its autumn forecast, the government had assumed growth of 1.3 percent for the current year. However, this prediction from October has no longer been considered realistic for a long time.
Most recently, the German gross domestic product shrank by 0.3 percent in the fourth quarter of 2023, due, among other things, to falling investments in buildings and equipment such as machines. If it falls again in the current first quarter, it will be referred to as a technical recession.
Even before Habeck’s appearance, it had become known that the federal government was expecting a later recovery in the German economy. In the current monthly report on the economic situation, the Ministry of Economic Affairs states: “Hardening factors such as weak foreign trade demand, strikes in public transport, high levels of sickness among employees and geopolitical tensions with delays in supply chains can all lead to the expected economic recovery being slower again delayed.”
The traffic light government wants to present plans in the spring
Both Habeck and Finance Minister Christian Lindner recently described Germany as no longer competitive as a location. According to Lindner, the traffic light government wants to present a concept to strengthen Germany as a business location by spring. This should probably be synchronized with the discussions about the draft budget for 2025, which is to be presented in the summer.
For 2025, the Munich Ifo Institute expects growth of 1.3 percent, the Kiel Institute for the World Economy (IfW) 1.2 percent. No new government forecast is expected in the annual economic report. Last October the estimate was 1.5 percent. This number will not be updated until spring.
Martin Polansky, RBB, tagesschau, February 14, 2024 5:51 p.m