The German Central Bank on Friday sharply lowered its growth forecasts for next year and said it would take time for Europe’s largest economy to emerge from recession.
Announcement
The German Central Bank expected the production rate to reach 0.4 percent in 2024, down from its last forecast of 1.2 percent in June.
In 2023, the German economy is expected to contract slightly due to rising energy and food costs, a slowdown in industrialization, and a weak global economy.
The German Central Bank said in its latest forecast that although the recovery will begin next year, it “will be subject to some delays.”
He added that weak external demand remains an obstacle to the industry, and private consumption is still restricted and high financing costs weaken investment.
Earlier this week two leading economic institutes lowered their growth forecasts for the German economy for next year.
However, German Central Bank President Joachim Nagel expressed optimism, saying that the economy “is likely to return to the growth path and gradually regain its speed.”
Inflation next year is expected to be half of what was expected to be this year, according to the bank.
The European Central Bank has aggressively raised interest rates and price rises have begun to subside quickly in recent months.
The German Central Bank expected the economy to gain further momentum in 2025 and 2026, growing by 1.2 percent and 1.3 percent, respectively.
This will be reinforced by the acceleration of foreign sales and the rise in household consumption.
The expectations took into account a German court’s decision last month that the ruling coalition violated the constitutional rules on debt, forcing Berlin to hastily re-establish its 2024 budget.
The forecasts were issued before the government reached an agreement this week on spending plans, but the central bank does not believe that will have a significant impact.
Additional sources • AP
2023-12-15 17:14:38
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