Stagnation in Germany: Economic forecast causes concern!

Stagnation in Germany: Economic forecast causes concern!

Various experts classify the economic prospects for Germany as worrying. Stagnation, which can be interpreted as “non-flow”, is forecast for this year in terms of both manufacturing output and general economic activity. This situation poses the risk of increasing unemployment and is generally viewed as undesirable, both in the economy and in other areas of life where progress is stagnating. Loud South German newspaper highlights that conversations and interactions that stagnate also have negative consequences.

A further picture of the economic situation is shown by the new forecast from Germany's economists, which is based on assumptions about global developments, exchange rates and interest rates. Official information on the forecast is from November 20, 2024 and provides an outlook for moderate growth in the global economy, which is expected at 3.5% in 2024, after 3.4% in the year to date. However, the future prospects for Germany are significantly clouded.

A look at the markets and inflation

Production in Germany will be louder in the next few years Bundesbank stagnate, which means that the sales markets of German exporters are weaker than world trade, but can converge again in 2025. Global trade, on the other hand, is losing momentum, which increases economic challenges. While crude oil prices are expected to rise, European wholesale gas prices are rising due to geopolitical tensions.

Inflation is expected to decline, with a forecast value of 2%. However, provisional budget management is also necessary as there is no federal budget for 2025. Planned legal changes, such as compensating for the cold progression of income tax, are also intended to ease the burden on the state budget, while temporary crisis measures will exert a certain amount of pressure until 2024.

The role of social security

Another point of concern is the increase in social security contribution rates, particularly in health and nursing care insurance. At the same time, revenue from profit-related taxes is expected to increase from 2025, while revenue from CO2 certificates will increase, although reference is made to the EU's “Next Generation EU” program ending in 2027, which could subsequently lead to declining revenue.

Overall, the outlook shows that Germany is facing stagnation, which could have far-reaching social and economic consequences. The challenge is to find solutions in this stagnant environment to maintain economic dynamism and not harm citizens' quality of life. The trend of stagnation could continue in the coming years unless effective countermeasures are taken.