Stagnation for the German economy is predicted for this year by the leading economic institutes of the country. According to the latest estimates, the German economy will contract by 0.1% this year and grow at a rate of just 0.8% in 2025.

In particular, Germany’s gross domestic product will contract by 0.1% in 2024, according to leading German economic institutes, which today released their forecasts, which the government uses as a benchmark to formulate its own estimates and the which are published twice a year. In March they expected the economy to expand by 0.1%.

“In addition to the economic recession, the German economy is also burdened by structural changes”said Geraldine Dany-Knedlik, head of forecasting and economic policy at Berlin-based DIW.

Concerns have been mounting in recent weeks about the apparent slowdown in Germany’s economy, with the key auto industry particularly hard hit. Weakness in the eurozone’s biggest economy is weighing on the wider eurozone, with the recovery recorded earlier in the year in the 20-nation bloc faltering.

The Bundesbank has warned that Germany may already be in recession, with further contraction likely in the third quarter, after falling 0.1% in the second quarter.

“Decarbonisation, digitalisation and demographic change – alongside stronger competition with companies from China – have triggered structural adjustment processes that reduce the long-term growth prospects of the German economy,” said Dany-Knedlik.

Next year, the German economy is expected to grow at a rate of 0.8%, the institutes predict. This is a weaker performance than the 1.4% they gave in their spring forecasts.

Inflation in Germany is expected to remain close to the European Central Bank’s target of 2% until 2026.

The five German institutes compiling the forecasts are DIW, Munich-based Ifo, Kiel-based IfW, Halle-based IWH and Essen-based RWI. Wifo and the IHS institutes in Vienna also contribute.

The German government is expected to release updated economic forecasts next month.