Leading Institutes Increasingly Pessimistic On 2024 Growth Prospects

The German GDP growth forecasts of a research institute collective published today were downwardly revised for 2024 versus the projections made in September (-1.2pp to +0.1%).

• But the revision was to be expected as some of the individual institutes had previously published their new estimates (and the new forecast was noted in a sources report from Handelsblatt earlier this week).
• For 2025, the forecast (by the 'Gemeinschaftsdiagnose' group consisting of 5 leading German economic research institutes including IFO) was largely unchanged (-0.1pp to 1.4%); however, the level of nominal GDP in 2025 will be over E30bln lower vs the pre-revision baseline.
• The collective forecasts - which now broadly match the individual institutes' estimates - show that the group is clearly pessimistic on short-term German economic conditions, which they see driven by an overlap of cyclical and structural factors, but at the same time they do not see the economy in freefall. The group projects a recovery to slowly start this spring but see overall momentum failing to going forward.
• Private sector consensus for German real GDP growth broadly mirrors the institutes' assessment and stands at +0.1% for 2024 and +1.1% for 2025 as of now. It was also downwardly revised by -0.1pp since the February survey, for both years, respectively. The German government projects growth at 0.2% in 2024.