Steam rises from the cooling towers of a power plant in Niederaussem, western Germany. [INA FASSBENDER/AFP]
Germany is expected to post disappointing economic growth of around 0.2 percent this year, rather than the slightly better 0.7 percent that government advisers had predicted in November.
The Government Advisory Council's revision of the growth forecast will be detailed in the next update in mid-May, but is expected to be in line with other estimates for this year's economic growth of 0.2 percent, adviser Ulrike Malmendier told Reuters.
“I think we're definitely going to go in the same direction… that's what our numbers suggest,” Malmendier said.
In its forecasts, the federal government initially assumed economic growth of around 1.3 percent this year, but revised this down to around 0.2 percent following the unexpectedly weak growth in the global economy and a ruling by the German Constitutional Court. This has an impact Amount of money available for taking out government loans.
The German economy is hit by a “perfect storm” of obstacles, including weak exports, expensive energy and problems in the transition to a green economy, Agence France-Presse commented on Wednesday. It was said that the economic problems had led to “disputes” among the members of Chancellor Olaf Scholz’s three-party coalition.
Germany, Europe's largest economy, ended 2023 in recession after economic growth contracted 0.3 percent in the final quarter. AFP said the latest data suggests there will be a further decline in the first quarter of this year.
Economics Minister Robert Habeck recently said the situation was “dramatically bad” as the country's industrial sector struggled with high energy prices caused by the Russia-Ukraine conflict. The resulting increases in commodity prices led to a sharp rise in inflation, leading the European Central Bank to repeatedly raise interest rates, which in turn dried up spending, dampened demand and damaged investment.
Major German companies, including chemical giants BASF and Bayer, were among around 60 companies that recently called on the European Union for more help and to develop a “European industrial agreement” to help the bloc's companies compete with rivals.
“Without a targeted industrial policy, there is a risk that Europe itself will become dependent on basic goods and chemicals. Europe cannot afford this,” the companies said in a joint statement.
Federal Finance Minister Christian Lindner said the country must help get the economy going again by easing the tax burden on companies and reducing regulations.
“If we do nothing, Germany will become poorer,” he told the `.
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