German Economic Experts Council Downgrades 2024 and 2025 Forecasts

The Council of Economic Experts for Germany has lowered its growth forecasts for the largest economy in Europe for 2024 and 2025, stating that Germany will continue to lag significantly behind other developed economies next year. Since 2021, the world's third-largest economy has remained below the average of the European Union and is expected to shrink for the second consecutive year in 2024, making it the worst performer among the G7 countries.

The council, which provides economic policy advice to the German government, reduced its 2025 growth forecast from 0.9% to 0.4%. Economists also revised the GDP growth forecast for this year from a previous estimate of 0.2% to a contraction of 0.1%. The council noted that Germany's GDP has only grown by 0.1% in real terms over the past five years, indicating that economic development continues to lag in international comparisons.

The council suggested that Germany's ongoing weak economic performance may primarily stem from declines in production and value added within the manufacturing sector. Council President Monika Schnitzer stated, “The weakness of the industry and the duration of the downturn indicate that the German economy is affected by both cyclical and structural problems.”

As the German economy struggles with sluggish overseas demand, a shortage of skilled labor, and increasingly tough competition from China, the global economy and industrial production are experiencing positive growth rates. According to the council's report, global GDP is expected to grow by 2.6% in 2024 and 2025, while growth in the Eurozone is forecasted to be 0.7% for this year and 1.3% for next year. Economists remarked, “The decoupling of the German industrial sector from the global economy indicates that the weakness in Germany is not solely cyclical.”