The German economy is expected to shrink by 2024. Federal Economics Minister Robert Habeck announced this at the beginning of October. Gross domestic product is expected to fall by 0.2%. The government is thus lowering its forecast for the year from 0.3%. The reason for this is a lack of recovery in the second half of the year. After the weak previous year, Germany would be the only member of the G7 group to record a decline this year.
“The German economy shrank in the second quarter, raising fears of a possible recession, defined as two consecutive quarters of decline,” reports the Reuters news agency. Due to structural problems and geopolitical challenges, the German economy has not grown strongly since 2018, said Federal Economics Minister Habeck.
The government has announced a growth package with 49 measures. These are intended to further stimulate the economy. “If they are implemented, the economy will be stronger and more people will get back to work,” says Habeck. However, in order to implement the plans, Parliament must approve them. In addition to the coalition government, it also requires the consent of the opposition.
More confidence for 2025
Next year, on the other hand, should be much more positive. The ministry predicts a slow recovery between now and the turn of the year. Growth of 1.1% is expected for 2025, instead of the previously expected 1.0%. The Ministry of Economic Affairs also made an initial forecast for 2026: the German economy will record growth of 1.6% that year. Inflation is also expected to continue to decline, falling from 5.9% last year to 2.2% in 2024, 2.0% in 2025 and finally 1.9% in 2026.
