In Germany, five leading economic research institutes have cut the country’s GDP forecast due to low domestic demand and high energy prices affecting exports. These institutes, including DIV in Berlin, IfV in Kiel, IVH in Halle, RVI in Essen and Ifo in Munich, released their biannual “collective diagnosis” of the German economy. The report emphasizes the importance of consumer purchasing power in improving the economic outlook.

According to the report, the German economy is experiencing weakness as growth forces decline. Economic and structural factors contribute to the slow overall economic development. Although the recovery is expected to begin in the spring, the momentum is not expected to be significant. High energy prices have been identified as one of the factors affecting domestic demand and making energy-intensive goods less competitive despite Germany’s strength as an economy. Additionally, government’s strict fiscal policy has limited its ability to issue new debt which has made it world’s lowest-performing largest economy last year. Despite this challenge, experts predict that growth will improve next year with a forecasted increase of 1.4%.

By Samantha Johnson

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