The German government has revised its economic growth forecast for 2024 slightly, increasing it from 0.2% to 0.3%, according to Economy Minister Robert Habeck. This adjustment comes after a previous sharp decrease in the forecast from 1.3% to 0.2% earlier in the year. Habeck cited signs of slight cyclical improvement as the reason for the adjustment, offering a small glimmer of relief after months of economic stagnation.
Habeck explained that production was on the rise due to falling energy prices, leading to a decrease in inflation. This in turn is restoring people’s purchasing power and boosting private consumption. He highlighted that the economy was showing signs of an upturn, especially in recent weeks. However, he emphasized that structural changes would be necessary for sustained higher growth rates in the future, including strengthening innovation and reducing bureaucratic obstacles to encourage more work and productivity.
The government is expecting an inflation rate of 2.4% for 2024, which is projected to decrease to 1.8% in 2025. Despite these positive developments, questions remain about whether Germany’s economic model is sustainable in the long term. Structural adjustments and policy changes may be necessary to ensure continued economic growth and stability.