Germany’s Economic Downturn: A Reality Check with the DIW Report and Government Forecast

German economic institutes reduce 2024 growth forecast to 0.1% – DW – 03/27/2024

On Wednesday, a group of leading economic think tanks released their six-monthly “collective diagnosis” of the German economy for early 2024. Titled “German economy ailing — reforming the debt brake is no cure-all,” the report revised the growth forecast down from 1.2% to near-stagnation, at 0.1% for the year. The summary of the report stated that Germany’s economy is struggling due to a phase of economic weakness accompanied by dwindling growth forces. Both economic and structural factors are contributing to the sluggish overall economic development.

The report highlighted that consumers and their recovering purchasing power, as inflation sinks and wages rise in many sectors, would be the most important fuel for the economic recovery. The collective diagnosis is a collaboration between leading German economic institutes including the DIW in Berlin, the IfW in Kiel, the IWH in Halle, the RWI in Essen, and Ifo in Munich.

In addition to this report, the German government also revised its economic forecasts downwards, warning of the likelihood of entering a technical recession by the end of the first quarter of 2024. German GDP contracted by 0.3% year-on-year in the last quarter of 2023, meeting

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