Berlin —
A leading German economic institute has cut its forecast for 2024, now expecting Europe’s largest economy to shrink by 0.1 percent, a person familiar with the figures in the autumn joint economic forecast told Reuters on Tuesday.
Germany’s economy contracted 0.3 percent last year, making it the weakest of the major euro zone economies.
Inflation is trending downwards, but consumption remains weak and rising energy costs, weak global orders and high interest rates continue to take a toll.
The latest economic data paints a bleak picture: A survey released on Tuesday showed that business morale in Germany fell for a fourth consecutive month in September, and the drop was bigger than expected.
Data earlier this week showed German business activity contracted by the most in seven months in September, with the economy on track to post a second consecutive quarter of falling output.
The institute also significantly cut its forecasts for the next few years, lowering its growth forecast for 2025 to 0.8 percent from 1.4 percent and expecting growth of 1.3 percent in 2026, according to people familiar with the matter.
The institutes’ joint economic forecast is due to be released on Thursday, and the figures may still change slightly before then.
The Ministry of Economy incorporates combined estimates from the Ifo, DIW, IWH, IfW and RWI institutes into its forecast.
The German government expects the economy to grow by 0.3% this year, in its latest forecast, due to be updated in October.
