The German economy is in crisis. This is also reflected in the expectations of the OECD, which has revised its forecast below. The outlook for the Eurozone is also rather bleak.
The industrialized nations organization OECD has revised down the growth forecast for the German economy for this year. The Paris-based organization said an increase of 0.3 percent was expected. In November, the OECD was still expecting economic growth in Germany to be 0.6 percent this year.
The organization also lowered its growth expectations for the euro area slightly to 0.6 percent for 2024. In the short term, the economy will be slowed by tight credit conditions. For 2025, the OECD sees growth of 1.1 percent in Germany and 1.3 percent in the euro area.
Compared to 2023, the OECD expects global economic growth to weaken overall. It predicts growth of 2.9 percent for the global economy this year, slightly more than the organization assumed in the fall. In 2023 it was 3.1 percent. The consequences of tight financial conditions are being felt in the real estate and credit markets, the OECD said. Global trade remains subdued. The attacks on ships in the Red Sea caused freight costs to rise sharply and shipping times to lengthen. This increases price pressure and disrupts production schedules. Overall, the organization sees strong geopolitical tensions as a key short-term risk to the economy and inflation. This is particularly true if the conflict in the Middle East disrupts the energy market.
In view of rising debts and upcoming spending, the OECD sees the financial pressure on governments increasing. In addition, stronger international cooperation is needed to revive global trade, make faster and better progress in decarbonization and ease debt burdens in lower-income countries.
The Paris-based OECD brings together countries that are committed to democracy and a market economy. In addition to large economies such as Germany, the USA and Japan, emerging countries such as Mexico and Chile are now members.
Source: Stern
