BERLIN, March 27 (Reuters) – Germany’s leading economic institutes on Wednesday lowered their forecast for the country’s economic growth to 0.1% for 2024, from 1.3% previously, amid high interest rates, weak demand global economy and political uncertainty are dampening hopes of a strong recovery.
They also forecast that gross domestic product (GDP) will increase by 1.4% in 2025, up from 1.5% previously.
“Although a recovery is likely from spring, the overall momentum will not be too strong,” said Stefan Kooths, director of economic research at the Kiel Institute for the World Economy.
Private consumption will become the main driving force of the economy this year, followed by an increase in exports in 2025.
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Private consumption should benefit from a decline in inflation, which is expected to slow to 2.3% in 2024 and to 1.8% in 2025.
A robust labor market will also support consumption, according to the institutes. Unemployment is expected to increase only slightly and fall again from spring. It should settle at 5.8% in 2024 before falling to 5.5% in 2025.
(Reporting Maria Martinez, French version Diana Mandiá, editing by Kate Entringer)
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