German government expects economy to shrink by 0.2% this year: newspaper

GERMANY’S economy ministry plans to downgrade its 2024 economic growth forecast, expecting Europe’s largest economy to shrink by 0.2 per cent, newspaper Sueddeutsche Zeitung reported on Sunday.

The forecast for an inflation-adjusted contraction, which the ministry is due to publish on Wednesday, follows a previous government projection of 0.3 per cent growth this year after a 0.3 per cent contraction in 2023.

Last month, Germany’s leading economic institutes downgraded their forecast for 2024 to a contraction of 0.1 per cent.

The ministry, led by Robert Habeck of the Green party, also plans to issue a forecast for 2025 economic growth of 1.1 per cent, up from 1 per cent forecast previously, and for 1.6 per cent growth in 2026, banking on a package of government measures to stimulate growth, Sueddeutsche reported without citing sources.

Habeck told Sueddeutsche that there is still a lot to do but the economy would see “significantly stronger growth” over the next two years if the government’s growth measures are fully implemented, which requires support from all regional states.

The ministry confirmed Habeck’s remarks and declined to comment further. REUTERS