Economic Decline Forecasted for 2024 (Predicted Economic Downturn for 2024)
The Hamburgische Weltwirtschaftsinstitut (HWWI) has revised its economic projections for 2025, predicting a growth rate of 0.25%, down from an earlier forecast of 0.5%. The institution attributes the slowdown to increasing economic uncertainty in the latter half of 2024.
The institute also notes that despite the German economy avoiding a technical recession, it experienced lackluster growth and stagnation in the run-up to the February 2025 elections, with both consumers and businesses hesitant to invest or spend due to political uncertainties. Moreover, export activity contracted due to a more restrictive trade policy by the new U.S. administration and threatened tariffs on German exports to the U.S.
International tensions and geopolitical uncertainties also contributed to a climate of caution among businesses and investors. It is only after new coalition agreements are reached and policy direction is clarified that a reduction in these hesitations is expected. The weak economic performance in the final months of 2024 is also expected to carry over into 2025, dampening growth prospects.
According to the HWWI's revised forecast, if economic reforms are implemented and uncertainty decreases, the German economy might rebound to 1.5% growth in 2026.
The institute does not provide a specific growth prediction for 2024 in its current statement, with sources confirming that Germany’s economic output in 2024 fell only slightly, around -0.2%.
Businesses in Germany have been cautious due to international tensions and political uncertainties, leading to a lack of investment and spending, as stated by the Hamburgische Weltwirtschaftsinstitut (HWWI). This hesitance has significantly impacted the finance sector, hindering growth projections for businesses in the economy.
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