Crises and austerity
The federal government expects only mini-growth – stabilization visible
February 13, 2024, 9:05 p.m
According to the federal government, the German economy will only grow slightly this year. In addition to the many imponderables and the still rather weak global economy, the traffic light’s austerity measures are also not blameless. But there is also good news.
The federal government is significantly reducing its forecast for the growth of the German economy this year. The draft of the new annual economic report, which is to be published next week, only assumes an increase in gross domestic product (GDP) of 0.2 percent, according to government circles. The government had previously expected 1.3 percent. However, the October forecast has no longer been considered realistic for a long time. A spokesman for the Federal Ministry of Economics said that the number could neither be confirmed nor denied.
In government circles it was said that there was no growth stimulus from the global economy and that there were numerous crises that were fueling uncertainty. A lower forecast was also expected due to budget consolidation.
High inflation, rising interest rates and the weak global economy had already slowed down the German economy in 2023. The gross domestic product shrank by 0.3 percent. “Nevertheless, there is evidence of stabilization,” said a government representative. “Despite the crisis, the labor market remains robust, inflation is noticeably weakening and energy prices are stabilizing.” In order to make this permanent, further measures are required to secure skilled workers, reduce bureaucracy and provide investment incentives for Germany as a location.
According to Finance Minister Christian Lindner, the traffic light government wants to present a concept to strengthen the 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. Both Lindner and Economics Minister Robert Habeck recently described the location as no longer competitive.