Plus becomes minus
Government significantly lowers economic forecast
October 6, 2023, 2:54 p.m
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Economics Minister Habeck agrees with the gloomy forecasts of leading economic institutes and is scaling back economic expectations for the current year: Instead of an increase of 0.4 percent, the government is now expecting a minus of 0.4 percent.
In view of inflation and the weakening global economy, the federal government is expecting a slight recession in Germany this year. A decline in economic output of 0.4 percent compared to the previous year is expected. Government circles confirmed corresponding media reports. In the spring, the traffic light coalition had assumed economic growth of 0.4 percent.
A significant relaxation in prices is expected in 2024. The inflation rate is expected to be 2.6 percent next year – after an average of around 6 percent this year. Energy prices stabilized – albeit at a higher level, it was said.
Weakening global economy hits export nation Germany
The reasons for the expected decline in gross domestic product (GDP) this year are energy prices, which are only gradually falling among consumers, comparatively high inflation rates and the weakening global economy, which is particularly affecting Germany as a traditional export nation. The loss of purchasing power would have led to consumer uncertainty. Private consumption is an important pillar of the German economy.
Leading economic research institutes and banking economists are also expecting a decline in GDP this year. According to government circles, the federal government expects economic growth of 1.3 percent next year and 1.5 percent in 2025. Federal Minister of Economics Robert Habeck wants to present the autumn forecast next Wednesday.