As of: March 26, 2024, 11:35 a.m
By: Bona Hyun
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Vice Chancellor Robert Habeck is open to a conversation with DFB President Bernd Neuendorf.
© Hannes P Albert/dpa
The traffic lights warned of a tense economic situation.
However, the economy in Germany could soon recover.
There are apparently early signs of this.
Berlin – Things are actually looking bad for the German economy in the coming year.
According to the Bundesbank, there is currently no sign of an economic recovery.
The Federal Ministry of Economics comes to a similar conclusion in a report on the economy.
But there are also signs that things could soon start looking up again.
German economy on the upswing – despite negative forecasts at the beginning of 2024
Leading institutes expect slight growth for the second quarter of 2024. There are initial indications of this, as shown by a new forecast from the institutes, which is available to
Handelsblatt
.
The mood in the German economy has risen surprisingly sharply and is better than it has been since mid-2023.
The business climate index determined by the Munich Ifo Institute rose to 87.8 points in March, after 85.7 points in February.
The Ifo index is perhaps the most important leading indicator of economic development.
The current negative development of the German economy is primarily a consequence of the disastrous economic year of 2023.
The declining inflation also speaks for a positive development.
The inflation rate was 2.5 percent in February 2024.
This is the lowest value since June 2021. In January the rate was 2.9 percent, writes the Federal Ministry of Economics in the latest report.
According to the joint diagnosis, the inflation rate should only be 2.3 percent in 2024.
In 2025 it could even fall to 1.8 percent, writes the
Handelsblatt
.
Skepticism about Germany as a business location – but investments should increase
Recently, an evaluation by the German Economic Institute caused unrest.
According to the employer-related institute, companies from abroad invested around 22 billion euros in the Federal Republic - which is the lowest they have been in ten years.
According to the Handelsblatt,
the institutes
also expect weak investments in 2024.
This primarily affects equipment investments - i.e. the financing of machines, vehicles and equipment - which is expected to decline by 1.8 percent in 2024.
In 2025, however, the institutes expect a Pius of 3.3 percent in this area.
Construction investments are expected to decline by 2.2 percent in 2024 and then increase by one percent.
German economy benefits from higher export expectations
The economy is likely to benefit in particular from stronger demand from abroad in the coming months.
The mood in the German export industry has improved and increased by 80 percent: According to the
Handelsblatt,
the Ifo export expectations rose significantly from minus seven to minus 1.4 points in February.
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Current leading indicators would also suggest a stabilization of foreign trade.
According to a report from the Ministry of Economics, the ifo export expectations brightened slightly in February (from -8.5 points to -7.0).
While export expectations in the electrical sector improved, they remained subdued for the major vehicle manufacturers;
in mechanical engineering they even fell to their lowest value since June 2020.
Economy in Germany is recovering – economist takes politicians responsible for “bad talk”
The biggest inhibitor to growth in the German economy could be the lack of workers as a result of demographic change.
In view of the weak economic phase, the labor market continues to be robust overall, and demand for work also remains at a high level.
At the same time, unemployment increased slightly by 11,000 people in February, and employment and employment subject to social security contributions increased noticeably in January and December.
Nevertheless, economists believe it is too early to be pessimistic about the German economy.
“In my view, parts of politics and companies are contributing to badmouthing the German economy,” says Berlin economist Ferdinand Fichtner to the
Handelsblatt.
The traffic light coalition itself had significantly reduced the growth potential of the German economy and only expects a GDP increase of 0.2 percent in 2024. (bohy)