The German economy is experiencing a downturn, as five leading economic research institutes in the country have lowered their GDP forecast. The report issued by these institutes, known as the “collective diagnosis” of the German economy, revised their previous growth forecast from 1.3% to just 0.1%. According to experts, consumer purchasing power is crucial in improving the economic outlook.
The report highlights that while Germany’s economy is facing challenges, there is a possibility of recovery starting in the spring. However, the momentum is not expected to be significant due to various factors affecting the country’s overall economic development. One such factor is high energy prices, which have made energy-intensive goods less competitive despite being a strength of the German economy. Another factor affecting Germany’s economy is the government’s strict fiscal policy, which limits new debt issuance and has resulted in low performance among major economies worldwide last year. Despite this, experts believe that growth will improve in the coming year with a forecast predicting a 1.4% increase. The collaborative report was compiled by five research institutes: DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen and Ifo in Munich.
