Economist warns: Low growth is becoming the norm in Germany

Economist warns: Low growth is becoming the norm in Germany

The German economy is in a phase of slack and, according to an economist, periods of contraction will become more common in the future. International Monetary Fund forecasts suggest economic growth in Germany will be just 0.2 percent in 2024, with a slightly more optimistic estimate of 1.3 percent in 2025. However, there is little to suggest strong growth in the long term.

The head of economic research at the Ifo Institute, Timo Wollmershäuser, warned of a new normal in Germany in which low growth will become the rule. Companies and consumers will likely have to prepare for periods of economic weakness to occur frequently. Despite this gloomy forecast, there is a certain tendency to recovery in the short term, with the risk of a recession decreasing.

A potential recovery of the German economy is also supported by increasing global trade, from which German companies could benefit. However, the Middle East conflict remains a potential threat, particularly through possible impacts on crude oil prices and global trade routes.

With regard to private consumption, Wollmershäuser sees potential for increases through higher wages and lower inflation, but political uncertainty in Germany could lead to restraint in consumption. The federal government's unpredictable policies are fueling uncertainty among consumers and leading to "precautionary saving", which could impair economic growth through private consumption if clear lines and trust are not created by the government.