Inflation is falling faster: Federal government raises growth forecast slightly

Inflation falls faster
Federal government raises growth forecast slightly

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Germany is crawling out of recession – and probably a little faster than expected. The federal government is revising its spring forecast at least slightly upwards. In international comparison, however, the country is not winning any prizes.

The federal government estimates the economic prospects for Germany to be somewhat more favorable than at the beginning of the year. The forecast for economic growth this year is expected to be raised by 0.1 percentage points to 0.3 percent, the Reuters news agency learned from an insider.

The government expects gross domestic product to increase by 1.0 percent in 2025. This emerges from the draft of the spring projection, which, according to current planning, Economics Minister Robert Habeck wants to present on Wednesday next week. When asked, his ministry declined to comment and referred to the publication of the economic forecast planned for next week.

According to the government, inflation is falling faster than expected this year. According to the insider, she is now assuming a price increase of 2.4 percent instead of the previous 2.8 percent. The expectation for 2025 is 1.8 percent.

The spring projection also forms the basis for federal, state and local tax revenue estimates due in May. It also influences the difficult preparation of the federal budget for 2025 and the financial plan until 2028. The traffic light government is currently fighting over the budget.

In the key figures for the annual economic report at the beginning of February, the federal government significantly reduced growth expectations to 0.2 percent this year and 1.0 percent in 2025. In 2023, Europe’s largest economy shrank by 0.3 percent. The International Monetary Fund assumes that Germany will once again be the slowest-growing economy of the major industrialized countries in 2024.

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