The German Institute for Economic Research DIW and the Institute for Economic Research Munich Ifo advanced today their forecast for the growth of the German economy in the next two years, following yesterday’s announcements by the government about significant spending cuts.

The DIW now forecasts growth of 0.6% in 2024 and 1.0% in 2025, up from the 1.2% it forecast for both years in its previous estimate in September.

“Today’s forecast takes into account that austerity measures will be taken in the next two years and that many of the promised projects will not materialize,” the Institute says in a statement and also points out that “private consumption has largely failed as an economic driver strength, contrary to initial expectations, as faced with uncertain times, consumers initially replenished their depleted financial reserves, rather than spending the money directly.”

Ifo, for its part, predicts that in 2024 growth will be limited to 0.9%, while a few months ago it estimated that it would reach 1.4%.