On October 9, German Economy Minister Robert Habeck held a press conference in Berlin to discuss the federal government’s autumn economic forecast. He revealed that Germany’s economy is projected to shrink by 0.2% in 2024, a significant downgrade from the previous spring’s forecast, which had predicted a growth of 0.3%.
This revised outlook suggests that Germany is set to experience a second consecutive year of economic decline, following a 0.3% contraction in 2023. It’s worth noting that the country hasn’t faced back-to-back economic downturns since 2002 and 2003.
Habeck emphasized that various structural factors are increasingly impacting the German economy. These include demographic changes, heightened competition, and geopolitical economic disparities. He pointed out that persistently weak domestic and foreign demand, combined with tight monetary policies, are further complicating economic progress. Leading indicators such as industrial production and business climate indices indicate that economic weakness is expected to persist in the latter half of the year.
Looking ahead, the forecast suggests that by early 2025, improvements in private consumption, a rebound in demand for industrial products from international markets, and increased investment activity could help rejuvenate Germany’s economic growth. The government is also actively tackling structural challenges with planned initiatives aimed at boosting the economy, which include tax cuts, employment incentives, and reductions in electricity prices.
Habeck remains optimistic, predicting that the German economy will show signs of recovery in 2025, with a growth expectation of 1.1%, and potentially increase further by 1.6% in 2026.
