Germany lowers 2024 economic forecast amid deepening recession fears
The German government plans to reduce its economic forecast for 2024. Previously, it anticipated growth, but now, according to Bloomberg, citing sources in the Ministry of Economy, it expects, at best, stagnation.
According to Bloomberg, the German Ministry of Economy is currently working on a new forecast for 2024 and it may still change before the final publication.
National economic research institutes lowered their forecasts for the German economy on Thursday. According to their predictions, Germany's GDP will likely fall by 0.1% this year. As recently as this spring, a minimal GDP growth of 0.1% was predicted, noted the Tagesschau portal on Thursday.
German economists expect GDP growth of 0.8% in 2025 and 1.3% in 2026. Tagesschau noted that Germany has been experiencing an economic slowdown for some time.
Problems of the largest eurozone economy
The latest PMI survey for Germany, conducted by S&P Global on behalf of Hamburg Commercial Bank, indicates worsening problems for the largest eurozone economy. According to the report, economic activity in Germany declined in September at the fastest rate in seven months.
The services sector, which has so far been a pillar of the German economy, is also slowing down. The report states, "support for the economy from growth in the services sector continued to weaken, with economic activity in the services sector growing only marginally and at the slowest pace in six months." The PMI index for services fell to 50.6 points from 51.2 points in August.
The authors of the survey point to increasing customer caution and a related reluctance to invest. New orders fell at the fastest rate in nearly a year, with declines noted in both services and industry. New export orders also fell broadly and at a faster pace.
The downturn in the economy is affecting the job market. The German private sector has entered a deeper recession, and companies are laying off employees. According to analysts, "the latest data showed the fourth consecutive month of job reductions. Moreover, excluding the first months of the pandemic, the overall rate of job cuts was the fastest in over 15 years."
