Five German institutes have lowered their GDP growth projections for this year from 1.3% to 0.1%, coinciding with challenges facing the German industry due to efforts to reduce reliance on Russian gas. This means the five German institutes have decreased their forecasts for the performance of the German economy by 1.2%, from 1.3% to 0.1%, compared to their predictions last fall. They have maintained their forecasts for the following year, 2025, with an expected GDP growth of 1.4%.
Among the reasons for the lowered projections, the institutes cited a decline in German exports due to reduced demand, weakened price competitiveness in energy-dependent goods, production relocation abroad, and uncertainty among investors in light of these factors. The German economy finished the year 2023 in a state of recession, as the GDP contracted by 0.3%.
The German central bank has also adjusted its GDP growth forecasts for this year and the next from 1.2% and 1.3% to 0.4% and 1.2%, respectively.
