FRANKFURT (Reuters) – The German economy is expected to grow a little slower than expected in 2024 and inflation is expected to be slightly higher, according to updated forecasts from the Bundesbank released on Friday.
Germany’s gross domestic product (GDP) is expected to grow by just 0.3% in 2024, down from 0.4% forecast in December, and growth is then expected to accelerate to 1.1% in 2025, up from 1. .2% previously forecast, the Bundesbank said.
The euro zone’s largest economy has struggled for most of 2023, with its industrial sector mired in a deep recession driven by anemic export sales.
However, demand has recovered in recent months, suggesting that the German economy and that of the euro zone as a whole could be beginning to recover.
“The German economy is emerging from the period of economic weakness,” Bundesbank President Joachim Nagel said in a statement.
The Bundesbank also revised its inflation forecast upwards, the day after the decision of the European Central Bank (ECB) to lower its interest rates.
“Inflation is proving stubborn, particularly in the case of services,” she warned.
Price growth is expected to reach 2.8% this year, compared to a forecast of 2.7% six months ago, and 2.7% in 2025, compared to 2.5% previously.
For 2026, the forecast remains unchanged at 2.2%.
(Report by Balazs Koranyi; Diana Mandiá, edited by Blandine Hénault)
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