Economics
Germany Tail End among Industrialized Nations
IMF lowers forecast: German economy expected to grow by just 0.2 percent this year.
The International Monetary Fund (IMF) has once again lowered its growth forecast for the German economy for the current year. According to the latest predictions, Germany's Gross Domestic Product (GDP) is expected to grow by a mere 0.2 percent, which represents a significant decline from the previous forecast of 0.5 percent. This revision positions Germany as the weakest of the major global economies.
The German economy already struggled with a growth of only 0.3 percent last year, while other major economies grew significantly stronger. The IMF expects a slight recovery with a growth of 1.3 percent for 2025, which however still remains below earlier estimates.
As the cause of the weak performance, the IMF sees, among other things, the persistently weak consumption in Germany, which is further burdened by the high energy costs as a result of the Russian attack on Ukraine. Despite a general stabilization of the world economy, the situation in Germany remains precarious.
The IMF emphasizes that the global economic recovery is stabilizing with an expected growth rate of 3.2 percent this year and next, which is still below the long-term average of 3.8 percent. Particularly the wealthier industrialized nations are showing a more robust recovery than the poorer countries.
Special attention is required for inflation, which is retreating in industrialized nations and makes interest rate cuts likely in the second half of the year, which in turn could stimulate economic growth. However, in emerging and developing countries, inflation remains a serious issue, with expected rates of 8.3 percent in 2024 and 6.2 percent in 2025.
The IMF also warns of the risks of high public debt, which has risen sharply since the coronavirus pandemic. Governments are called upon to recreate fiscal leeways in order to be able to respond to future crises, even if this may weigh on growth in the short term.
These developments indicate that global economic challenges continue to play a significant role and pose difficult tasks for the German economy in particular.
