MNI BRIEF: German Economy Stuck In Stagnation - IWH Halle

MNI (LONDON) - The Halle Institute for Economic Research (IWH) has lowered its medium-term growth forecast for Germany as weak business sentiment, a worsening export environment, higher household savings rates and sluggish consumer spending look set to continue.

Germany’s GDP is likely to “stagnate” this year before rising by 1.0% in 2025, it said in its autumn forecast, having been expected to grow by 0.3% and 1.5% respectively in the spring. Household concern over Germany’s economic future likely contributed to another slight rise in savings rates, the report said. The number of people in employment is expected to hold steady over the remainder of 2024, before increasing slightly in 2025. (See MNI INTERVIEW: Prices Key To Puzzle Of Weak German Consumption)

There is “widespread pessimism” among German firms regarding earnings prospects, while Germany’s share of global goods and exports has fallen “significantly” since the pandemic, IWH Halle vice president Oliver Holtemoeller said Thursday.