"German Government Lowers Economic Growth Forecast to Negative This Year"

The German government is reportedly set to significantly downgrade its domestic gross domestic product (GDP) growth forecast for this year from 0.3% to -0.2%.

According to foreign media including the German daily S?ddeutsche Zeitung (SZ) on the 6th, the German government had sharply lowered its economic growth forecast for this year from 1.3% to 0.2% last February. After signs of an economic rebound appeared in the first quarter, it slightly raised the forecast to 0.3% in April.

Earlier, five think tanks including the German Institute for Economic Research (DIW), the Kiel Institute for the World Economy (IFW), and the Halle Institute for Economic Research (IWH) jointly revised down Germany’s economic growth forecast for this year from 0.1% to -0.1% in last month’s economic outlook.

If the government and academic forecasts hold true, the German economy will experience negative growth for two consecutive years following last year.

The German economy showed a brief recovery after the COVID-19 pandemic but returned to negative growth last year due to the energy crisis triggered by the outbreak of the Ukraine war in 2022. The economic growth rate for the first quarter of this year was 0.2% quarter-on-quarter, and -0.1% in the third quarter, indicating stagnation.

However, the government expects the economy to start rebounding in the second half of this year, projecting growth rates of 1.1% for next year and 1.6% in 2026.

The German government is pinning hopes on a 57 billion euro (approximately 84.4 trillion won) stimulus package for next year. Robert Habeck, Minister for Economic Affairs and Climate Protection, told SZ, "If the growth plan is fully implemented and effective, the economy can grow faster over the next two years."