Economic forecast: Experts: German economy will shrink slightly in 2024

According to experts, the German economy will shrink slightly this year. The Institute for Macroeconomics and Business Cycle Research (IMK) of the trade union-affiliated Hans Böckler Foundation has revised its economic forecast for 2024 slightly downwards. The gross domestic product will therefore fall by 0.2 percent. Most recently, zero growth was predicted.

The economic experts justified the decision with the subdued demand from abroad, the European Central Bank’s monetary policy being too tight despite the first interest rate cuts, high energy prices and the ongoing uncertainty about future economic policy in the Federal Republic.

IMK only expects an increase of 0.1 percent next year

The researchers also improved their forecast with a view to 2025. They assume that the economic situation will only improve slightly in the coming year. Only a mini-growth of 0.1 percent is expected. In September the forecast was 0.7 percent. The IMK had originally expected an even higher increase in 2025.

Other economic experts such as the Council of Economic Experts, the Institute for the World Economy in Kiel and the Leibniz Institute for Economic Research in Halle had also recently lowered their forecasts.

Expert: Politics must rebuild trust

“We have to get out of the cycle of stress and uncertainty that the economy and society have been stuck in for several years now,” said Sebastian Dullien from the IMK. Many employees were hesitant to spend their money in the face of bad news. Companies, especially from industry, shied away from urgently needed investments.

Dullien therefore calls on politicians to act: “In this situation, it is very important that politicians rebuild trust through decisive signals.” This includes creating clarity about medium-term economic and industrial policy support for the transformation.