BERLIN, Sept 26 (AFP): Germany's economy is expected to shrink slightly in 2024, leading economic institutes said on Thursday, as the traditional manufacturing powerhouse continues to stagnate.
Output in Europe's largest economy will decline by 0.1 per cent this year, five think tanks said in a joint statement, after it shrank by 0.3 per cent in 2023.
The new figure was a small but significant downgrade on the institutes' previous estimate of 0.1 per cent GDP growth for 2024, made earlier this year. "The German economy has been stagnating for more than two years," the institutes-DIW, Ifo, IfW Kiel, IWH and RWI-said in the joint statement.
"A slow recovery is likely to set in next year, but economic growth will not return to its pre-coronavirus trend for the foreseeable future," they said.
The institutes forecast growth to reach 0.8 per cent in 2025, a downward revision on their previous estimate of 1.4 per cent.
For 2026, they predicted the German economy to expand by 1.3 per cent.
Germany, traditionally a driver of European growth, was the only major advanced economy to shrink in 2023 as it battled high inflation, an industrial slowdown and cooling export demand.
While inflation has slowly come down in 2024, a hoped-for recovery has failed to materialise between a continued industrial slowdown and weak demand in key market China.
Most recently, the economy underperformed analyst expectations in the second quarter, shrinking by 0.1 per cent.
