Afp. The German government projects an economic recession, with a contraction of the gross domestic product of 0.2 percent this year, after revising downwards its forecasts, which expected growth of 0.3 percent, the German newspaper reported yesterday Süddeutsche Zeitung.
Europe’s first economy will enter recession for the second consecutive year, after a contraction of 0.3% in 2023, caused by the increase in energy prices after the Russian invasion of Ukraine, a slowdown in the industrial sector and a drop in exports .
Although this year the German government expected a recovery due to the containment of the inflationary outbreak and the first cut in interest rates by the European Central Bank (ECB), the main economic institutes of that country revised their forecasts downwards on September 26 , and GDP is now expected to stagnate or contract this year.
Germany faces structural challenges such as competition with China, a shortage of skilled workers and a complex ecological transition.
In its outlook for 2025, the Ministry of Economy foresees growth of 1.1 percent next year, against one percent in its previous forecasts, according to Süddeutsche Zeitung.
The same newspaper warned: The economy continues to be characterized by a general reluctance of consumers to spend
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The measures planned in this scenario include tax cuts, a permanent reduction in energy prices for industry and cuts in bureaucracy and incentives to keep older people in the labor market and attract qualified foreign workers.
The Minister of Economy, Robert Habeck, will make the projections official on Wednesday, October 9.