×

Germany’s Economic Outlook Deteriorating: Low Domestic Demand and High Energy Prices Blamed

Economic Growth in Germany Hindered by Experts.

Germany’s Economic Outlook Deteriorating: Low Domestic Demand and High Energy Prices Blamed

A group of five leading economic research institutes in Germany have downgraded their GDP outlook for the country, citing low domestic demand and high energy prices as the main factors. The report, which was released by the institutions, shows that Germany’s economy is showing signs of weakness, with declining growth rates and overlapping economic and structural factors contributing to sluggish overall economic development. Despite expectations of a recovery in the spring, experts warn that the momentum may not be significant.

According to the report, domestic demand has not increased as anticipated, with high energy prices affecting the competitiveness of energy-intensive goods – a key strength of the German economy. Additionally, Germany’s economy is facing challenges due to a sharp tightening of fiscal policy by the government in preparation for the return of the constitutional debt brake – which restricts new debt issuance. As a result, Germany was one of the worst-performing major economies in 2021. However, projections for next year anticipate growth picking up to 1.4%.

The “diagnosis” was compiled by five prominent German economic research institutes, including DIW in Berlin, IfW in Kiel, IWH in Halle, RWI in Essen and Ifo in Munich. These institutions emphasized that consumer purchasing power is crucial for improving economic outlook.

You May Have Missed