German Economy Faces Uncertain Future with Decreasing Growth Forecast and High Energy Prices

In Germany, five economic research institutes have cut their GDP forecast due to low domestic demand and high energy prices affecting exports. The report, titled “Collective Diagnosis of the German Economy,” was published by DIV in Berlin, IfV in Kiel, IVH in Halle, RVI in Essen and Ifo in Munich. They revised the growth forecast from 1.3% to 0.1%, emphasizing the importance of consumer purchasing power for improving economic prospects.

The German economy is struggling with prolonged economic weakness and a weakening of growth forces, according to experts. Structural factors and slow overall economic development were highlighted as contributing factors to this weakness. Despite potential growth opportunities in the spring, the report suggests that overall momentum may not be significant enough to reverse the current trend.

One of the key challenges facing Germany is a lack of domestic demand growth caused by high gas and electricity prices. These prices have led to decreased competitiveness for energy-intensive goods, which are a significant source of exports for Germany’s economy. In addition, government policies limiting issuance of new debt due to constitutional debt brake provisions have further impacted economic growth prospects.