In 2024, Germany’s economy is predicted to stagnate despite a promising start to the year, according to the German economic institute IW. While manufacturing and construction sectors are still experiencing recession, consumption is expected to be the only bright spot as inflation eases. However, consumption alone will not be enough to drive a real upswing in the economy. Investments are currently depressed due to geopolitical tensions and high interest rates.
Last year, Germany’s economy shrank by 0.2%, making it the weakest performance among large eurozone economies. This year, Germany is forecasted to see 0% growth, lagging behind countries like France, Italy, Britain, and the United States. Despite avoiding a recession at the beginning of the year with a 0.2% growth in the first quarter, Germany had shrunk by 0.5% in the last quarter of 2023. The German government predicts 0.3% GDP growth for this year.
According to IW, foreign trade is expected to remain weak and provide little economic stimulus in 2024. The unemployment rate in Germany is projected to increase to an average of 6% for the year from 5.7% in 2023 despite a record number of 46 million employed people in that same year. The effects of economic weakness on the labor market in Germany are becoming more evident as policy boosts that improve business conditions are needed to prevent wasting its economic potential fully
