Experts slash economic growth forecast for ‘ailing’ Germany

Experts slash economic growth forecast for ‘ailing’ Germany

Five of Germany’s economic research institutes slash Germany’s GDP outlook, citing low domestic demand, and high gas and electricity prices hitting exports.


A group of leading economic think tanks in Germany have released their six-monthly “collective diagnosis” of the Germany economy.

A forecast made last autumn of 1.3% growth has been revised down to 0.1%, with the  report saying that consumer’s purchasing power would be crucial to improving the economic forecast.

“The economy in Germany is ailing. An economic weakness that lasted until the end is accompanied by dwindling growth forces. Economic and structural factors overlap in the sluggish overall economic development. Although a recovery is likely to begin in the spring, the overall momentum will not be too great,” the report said. 

Experts warned that domestic demand had not increased as expected, as high gas and electricity prices created a loss of competitiveness for energy-intensive goods, which are Germany’s strength. 

The German economy is also suffering because of the government’s sharp tightening of fiscal policy as it makes provisions for the constitutional debt brake to return. That limits the amount of new debt it can issue. 

Germany’s economy was the worst performing major economy in the world last year. Next year’s forecast expected growth to pick up to 1.4%. 

The “diagnosis” was compiled in by the DIW in Berlin, the IfW in Kiel, the IWH in Halle, the RWI in Essen and the Ifo in Munich.

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