Germany experiences further economic unproductivity
Date
12/15/2024 4:46:30 AM
(MENAFN) Germany’s central bank has significantly revised its growth forecast for the EU’s largest economy, predicting a contraction this year and minimal growth in 2025, driven by ongoing deep-rooted issues.
In its monthly update, published on Friday, the Bundesbank stated that the country’s GDP is expected to decline by 0.2 percent this year, largely due to sustained weakness in the industrial sector. This marks a considerable downgrade from the previous prediction of a 0.3 percent expansion.
The persistent weakness in the industrial sector is now mainly viewed as structural, placing pressure on export businesses and investments, according to the central bank. Additionally, the labor market is being impacted, which in turn is suppressing private consumption, the report highlighted.
“Against this backdrop, the German economy is set to stagnate in the winter half-year 2024-25 and only begins to make a slow recovery over the course of 2025,” the Bundesbank stated.
Output is now expected to rise by 0.2 percent next year, compared to the earlier forecast of 1.1 percent. For 2026 and 2027, the Bundesbank anticipates growth of 0.8 percent and 0.9 percent, respectively.
“The German economy is struggling not just with persistent cyclical headwinds but also with structural problems,” Bundesbank President Joachim Nagel commented in the report.
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