In the annual report published on November 13th, economists assume a real GDP decline of 0.1% for 2024. For 2025 they forecast growth of 0.4%. In the spring report in May they had calculated an increase of 0.2% for 2024 and an increase of 0.9% for 2025. According to the report, inflation is expected to decline significantly. In 2024 it is expected to be 2.2% and in 2025 it should be 2.1%. In the past five years, real GDP has only grown by 0.1%.
Economists conclude that the ongoing weak growth is due to economic and structural problems. Future-oriented public spending has not been given enough priority in recent years. To achieve this, institutional arrangements with a high binding effect need to be created, in particular a transport infrastructure fund and minimum quotas for education and defense spending. Germany is also lagging behind in the digitalization of the financial system and is failing to utilize potential for increasing efficiency. Economists are bringing the digital euro into play here, which could offer a cost-effective, secure alternative for digital payments that is independent of non-European payment service providers and increases competition. In addition, in order to have more living space in metropolitan areas and better access to social housing, the housing supply must be strengthened, the housing stock must be used more efficiently and social housing policy must be more targeted. Politicians are failing to invest in projects whose benefits will only materialize in the future and are prioritizing spending that benefits the current electorate.
