ifo Institute Raises Growth Forecast for Germany to 0.4 Percent for 2024

The ifo Institute has raised its forecast for economic growth in Germany this year from 0.2 percent to 0.4 percent. Next year, the figure is likely to accelerate to 1.5 percent. “New hope is currently emerging,” says Timo Wollmershäuser, Head of Forecasts at ifo. “The German economy is slowly working its way out of the crisis. The second half of 2024 is expected to be significantly better than the first half.” At the same time, inflation will slow down, from 5.9 percent last year to 2.2 percent this year and just 1.7 percent next year.

“During the remainder of the year, the purchasing power of private households is likely to grow stronger, and macroeconomic recovery should pick up speed as consumer spending normalizes,” says Wollmershäuser. Global trade in goods and global industrial production should continue to recover, especially from the second half of the year. He said that this was also driven by a gradual upturn in investment, supported by the easing of monetary policy in industrialized countries. The ifo Institute expects two more interest rate cuts by the European Central Bank this year.

The number of people in employment is likely to rise from 45.9 million to 46.1 million this year and to 46.2 million next year. The number of unemployed will also increase from 2.6 to 2.7 million, but then drop back to 2.6 million, which corresponds to a rate of 5.7 percent, then 5.9 percent, and ultimately 5.6 percent. The public deficit will fall from EUR 99 billion to EUR 73 billion, and then decline further to just EUR 54 billion. The current account surplus, criticized internationally, is likely to grow from EUR 258 to EUR 312 billion, and then EUR 306 billion, which would represent 6.3 percent, then 7.3 percent, and finally 7.0 percent of economic output respectively.