Germany slashes 2024 growth forecast to just 0.2% as economy in ‘tricky waters,’ minister says

Germany slashes 2024 growth forecast to just 0.2% as economy in 'tricky waters,' minister says

Robert Habeck, German Minister for Economy and Climate Protection and Vice Chancellor, is pictured during the weekly meeting of the cabinet on February 21, 2024 in Berlin, Germany.

Florian Gaertner | Photothek | Getty Images

Germany’s gross domestic product is now expected to grow by just 0.2% this year, as the country wades in “tricky waters,” German Economy Minister Robert Habeck said Wednesday.

The revised GDP growth forecast is down from a previous estimate of 1.3%. Habeck added that the government now anticipates the German GDP will grow by 1% in 2025.

Speaking during a press briefing, the minister attributed the forecast revision to an unstable global economic environment and to the low growth of world trade, alongside higher interest rates.

“The economy is in tricky waters,” Habeck said in a statement released online, according to a CNBC translation. “We are coming out of the crisis more slowly than we had hoped.”

This is despite energy costs and inflation falling, and despite consumer spending power increasing again, he said. Habeck nevertheless maintained that Germany has proven resilient in the face of losing access to Russian seaborne crude and oil product supplies, as a result of the war in Ukraine war.

The country narrowly avoided a recession in the second half of 2023, despite its GDP declining by 0.3% in the final quarter.

Habeck also addressed the outlook for inflation, saying it is expected to fall to 2.8% throughout 2024, before returning to the 2% target range again in 2025.