Germany’s IfW Kiel economic institute cuts 2024 GDP forecast
FILE PHOTO: Construction sites are photographed in Frankfurt, Germany, July 19, 2023. REUTERS/Kai Pfaffenbach/File Photo
By Maria Martinez
BERLIN (Reuters) – Germany’s gross domestic product is unlikely to grow significantly this year, think tank IfW Kiel Institute for the World Economy said on Wednesday, cutting its economic forecast for the euro zone’s largest economy for the current year.
In a report, the independent institute said it expects GDP to increase by 0.1% in 2024, down from an earlier forecast of 0.9% growth.
Leading indicators signal economic output will stagnate in the first half of the year, with GDP only growing 1.2% next year, in line with the previous forecasts, IfW Kiel said.
“With the lack of recovery so far, there are increasing signs that the German economy is primarily burdened by structural problems and that the scope for growth is therefore smaller,” the report said.
GDP in 2025 will only be 2% above pre-pandemic 2019 levels, according to IfW Kiel.
Unemployment is expected to rise to 5.8% in 2024 from 5.7% in 2023, before falling to 5.6% in 2025. The shortage of skilled labour will also lead to significantly higher wages, the report said.
Inflation is expected to fall to 2.3% this year from 5.9% in 2023, and is seen dropping to 1.7% in 2025.
“As consumer price inflation is falling noticeably, real disposable income will rise again this year for the first time in three years and stimulate private consumption,” the economic institute said.
Exports are likely to fall 1.7% this year before picking up again with the gradual recovery in global trade next year, when IfW Kiel forecasts 3% growth in exports.
