(MENAFN) The German Institute for Economic Research (DIW) has projected a continued contraction in the country's economy during the first quarter of this year. Following a 0.3 percent decline in GDP during the fourth quarter of 2023, expectations for a modest uptick in GDP during the first quarter of 2024 are diminishing, as stated by the institute on Wednesday.
DIW economist Timm Bonke highlighted the ongoing challenges faced by the German economy in navigating its way out of the economic downturn. Factors contributing to the struggle include the lingering effects of the Russian-Ukrainian conflict, elevated interest rates, uncertain economic policy conditions, and subdued growth in the global economy.
Furthermore, Bonke expressed concern regarding the impact of the rise of populist and extremist political parties, which he believes undermines business confidence and prospects for the future in Germany.
The German economy's contraction by 0.3 percent in the final quarter of 2023, attributed partially to high inflation eroding household purchasing power, poses the risk of the country technically entering into a recession if it continues to shrink in the first quarter of 2024.
In response to the challenging economic environment, the German government has revised its GDP growth forecast from 1.3 percent to 0.2 percent. This adjustment reflects subdued global demand, geopolitical uncertainties, and notably high inflation levels impacting economic performance in the country.
MENAFN29022024000045015839ID1107915557
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.