Germany encounters additional economic stagnation
Date
12/17/2024 7:23:56 AM
(MENAFN) Germany’s central bank has significantly downgraded its economic growth forecast, predicting a contraction of 0.2% in 2024, followed by near-zero growth in 2025. The country’s industrial sector remains weak, now viewed as a structural issue that is affecting exports, investments, and the labor market, thus dampening private consumption.
The Bundesbank's report stated that the German Economy will stagnate through the winter of 2024-2025 and will see a slow recovery by 2025. It also revised the 2025 growth forecast to just 0.2%, a sharp drop from the previously predicted 1.1%. For 2026 and 2027, growth is expected to be modest at 0.8% and 0.9%, respectively.
Bundesbank President Joachim Nagel attributed the slowdown to both cyclical and structural challenges, including geopolitical uncertainty, energy price crises, demographic changes, and the green transition. The bank also cautioned that a potential trade war with the US, particularly tariffs on German imports, could further harm the economy. Additionally, Germany was the only major economy in the G7 to contract in 2023.
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