BERLIN, Sept. 5 (Xinhua) -- The Munich-based ifo Institute for Economic Research has downgraded its economic growth outlook for Germany on Thursday, predicting zero growth for 2024, down from the previous estimate of 0.4 percent. The growth forecast for 2025 has also been revised downward significantly, from 1.5 percent to 0.9 percent.
"The German economy is stuck and languishing in the doldrums, while other countries are feeling the upswing," said Timo Wollmershaeuser, head of forecasts at ifo.
"We have a structural crisis. Too little investment is being made, especially in manufacturing, and productivity has been stagnating for years. We also have an economic crisis. The order situation is poor, and gains in purchasing power are not leading to increased consumption but instead to higher savings because people are unsettled," he added.
The current savings rate stands at 11.3 percent, notably higher than the pre-pandemic 10-year average of 10.1 percent. On a positive note, inflation is expected to decline gradually, easing from last year's average of 5.9 percent to 2.2 percent this year.
The unemployment rate is projected to rise from 5.7 percent last year to 6.0 percent this year, then decrease to 5.8 percent in 2025, and eventually settle at 5.3 percent. The national budget deficit is anticipated to hit 2.0 percent of GDP this year, then shrink to 1.3 percent and 0.9 percent in the next two years.
However, the construction sector is expected to see a 3.1 percent decline in output this year, while manufacturing is forecast to contract by 2.0 percent, according to the ifo Institute.
There is an investment slump, particularly in manufacturing, which accounts in Germany for a significantly higher proportion of economic output than elsewhere, Wollmershaeuser noted.
"The population is aging faster, with fewer and fewer people in work. Shifts from the manufacturing to the service sector largely explain the productivity standstill of recent years," he added. ■
