As of: February 19, 2024, 2:56 p.m
By: Marcel Reich
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Germany's economy is facing a recession.
Leading economists see politicians as having a duty to sustainably stimulate the economy.
Munich – In view of the threat of a recession, leading German economists are calling for more political efforts to sustainably stimulate the economy.
Ifo boss Clemens Fuest pointed out on Monday at a video conference of leading German economic researchers that consumers were unsettled and companies' business was going "extremely badly" at the beginning of the year.
The general conditions for investments are unfavorable, also because of the burden of bureaucracy.
The traffic light government and the opposition Union should work together to consolidate public investments: “I believe these would be confidence-building measures that would help immediately,” said Fuest.
Clemens Fuest says that politicians have a duty to set better framework conditions.
© Sebastian Kahnert/dpa
The President of the Berlin DIW, Marcel Fratzscher, also emphasized that politicians have a duty to create better framework conditions.
More public investment in efficient transport, digital and educational infrastructure is urgently needed.
Lack of desire to consume and lack of investment “to a certain extent home-grown”
According to the President of the Halle Institute for Economic Research, Reint Gropp, the lack of desire to consume and the lack of investment are “to a certain extent home-made”.
This has a lot to do with communication.
The federal government is extremely bad at communicating a coherent strategy in the fight against climate change, demographic problems and to ward off geostrategic risks: “This lack of communication of a strategy leads to this uncertainty among both households and companies.” The government is persecuting you “Micro-directory approach” that doesn’t work well: “There will be far too little reliance on price signals and market mechanisms and too much on micro-control by the state.”
According to the Bundesbank's forecast, the German economy may be at risk of a recession in the current first quarter due to the increasing number of strikes.
With the second decline in economic output in a row, it would be in a so-called technical recession.
In the fourth quarter of 2023, Europe's largest economy shrank by 0.3 percent.
According to insiders, the federal government expects only low economic growth for the current and next year.
For 2024, only an increase of 0.2 percent is estimated.
According to the draft annual economic report, an increase of 1.0 percent in gross domestic product (GDP) is expected for 2025.
Economics Minister Robert Habeck (Greens) will present the report on Wednesday.
With material from Reuters