Zero growth for the German economy expects for this year the Ifo Institute for Economic Research in Munich, which on Thursday revised its previous estimate for growth of 0.4%. The former “locomotive” of Europe is bogged down, with the risk of dragging down the economies of the rest of the weaker European states. The economy is expected to grow by only 1.5% until 2026.

In today’s announcement, the Institute corrects its forecast for 0% growth this year, instead of the previous 0.4%, and for 2025, from 1.5% to 0.9%. “The German economy is stuck and languishing in recession, while other countries are showing signs of recovery. We have a structural crisis. Little investment is being made, especially in the manufacturing sector, and productivity has been stagnant for years. We also have an economic crisis, with the situation in orders being unfavorable. The increase in purchasing power does not lead to an increase in consumption, but, on the contrary, to more saving because people are upset,” explained Ifo’s head of forecasting, Timo Volmershäuser.

The savings rate is now 11.3%, significantly higher than the pre-pandemic decade average of 10.1%. At the same time, the rate of inflation will fall from 5.9% in 2023 to 2.2% this year and then be limited to 2.0% and 1.9% for each of the next two years. The unemployment rate will increase from 5.7% last year to 6.0% for the current year and will then drop to 5.8% and finally reach 5.3% in two years. The national budget deficit is likely to reach 2.0% of economic output for 2024 and decline to 1.3% and 0.9% in 2025 and 2026 respectively.