The German economy is not getting going. Now, according to a report, the federal government has to admit: There will be no growth this year.
According to a media report, the federal government now expects the German economy to shrink in 2024. The economic forecast will be revised significantly downwards, reported the “Süddeutsche Zeitung”. Economics Minister Robert Habeck (Greens) had originally expected a slight increase in gross domestic product of 0.3 percent this year – now a minus of 0.2 percent is expected. Habeck wants to present the new forecast on Wednesday in Berlin.
The step does not come as a surprise, as the major economic research institutes had also recently revised their expectations downwards. They expect a minus of 0.1 percent this year. The main reason is uncertainty among companies and citizens. The persistently high level of interest rates is slowing down investments, companies are cautious due to the volatile economic and geopolitical situation, and private households are increasingly saving their income instead of investing in home ownership or consumption.
Both the federal government and research institutes assume that the situation will gradually improve in the coming year. The economy should then grow again. However, the prerequisite is that the growth initiative planned by the traffic light government with tax improvements, work incentives and a reduction in bureaucracy takes off. So far only a fraction of this has been implemented.
“There is still a great need for action. A first, necessary step is the growth initiative of this federal government,” said Habeck to the “Süddeutsche Zeitung”. “The German economy can grow significantly faster in the next two years if the measures are fully implemented and can have their effect. Now is not the time for concerns, now is the time to act quickly.” The government fears that the federal states could slow down the measures because they will collect less taxes.
Source: Stern
