IMK forecasts: German economy faces major challenges in 2024

IMK forecasts: German economy faces major challenges in 2024

According to a report by web.de, the economic research institute IMK predicts major challenges for the German economy in 2024. The gross domestic product (GDP) is expected to shrink by 0.3 percent, according to the economic researchers.

This forecast raises major concerns, as experts see the main reasons for the shrinking GDP in the debt brake, which makes investments in climate protection and infrastructure more difficult. Structural change, if not adequately accompanied, could also endanger our prosperity. The announcement by economic researchers that GDP could return to 2019 levels by the end of 2024 is alarming. Germany could “experience a lost half decade economically,” says Sebastian Dullien, the scientific director of the IMK.

Given this bleak outlook, economic researchers are calling for a reform of the debt brake and proposing the introduction of a “Golden Rule” to exclude important investments. However, this reform could face hurdles due to a lack of political majorities. There is also a risk that the solid labor market will falter and unemployment will increase noticeably if private households and companies continue to show a low willingness to buy and invest. This poses significant challenges for economic policy.

Given these forecasts, financial experts and analysts should view the market prospects for Germany with great caution. A shrinking economy and increased unemployment could have a negative impact on the financial industry. Investment and purchasing propensity could also decline, which could lead to a further slowdown in the economy. There is an urgent need to analyze the impact of these forecasts on the market and the financial industry and develop appropriate measures to manage the potential risks.