Germany’s Economy Minister Robert Habeck has revised the country’s economic growth forecast for 2024 from 0.2% to 0.3%, citing signs of a slight cyclical improvement as the reason for this adjustment. The government had drastically lowered its forecast in February from 1.3% to 0.2%, so the 0.1% increase offers a glimmer of relief after a period of economic stagnation.
Habeck noted that production is increasing due to declining energy prices, which are also causing inflation to decrease. This is leading to a gradual restoration of people’s purchasing power and an uptick in private consumption. He mentioned that the decrease in inflation will result in higher consumer demand as people have more money to spend, which is promising for economic recovery. Habeck also highlighted an increase in signs of an economic upturn in recent weeks.
However, he also mentioned that “structural changes” are necessary to achieve higher growth rates in the future. This includes measures to strengthen innovation, reduce unnecessary bureaucracy, and provide greater incentives for people to work harder and longer. The government is anticipating an inflation rate of 2.4% in 2024, decreasing to 1.8% in 2025.
As Germany looks towards the future, there are discussions about whether the country’s economic model is sustainable