Germany’s government stated that its economy was on track to contract for the second year in a row, according to AP News.
The new forecast that gross domestic product will shrink by 0.2 per cent this year compares with the government’s 0.3 per cent growth forecast in April. Overall, the economy shrank 0.3 percent in 2023.
The government is forecasting growth of 1.1 per cent next year and 1.6 per cent in 2026.
Vice Chancellor Robert Habeck, also economy minister, said the German economy had not seen strong growth since 2018 as the country’s structural problems were supplemented by broader global challenges.
In the middle of the crises, Germany and Europe are squeezed between China and the US, and must learn to assert themselves.
The German Chamber of Commerce and Industry argued that more reforms were needed to stimulate investment. Chamber CEO Martin Wansleben noted that Germany had only once had two consecutive years of recession, in 2002 and 2003. At that time, the government launched a series of welfare reforms.
There has never yet been such a prolonged phase of weakness in the German economy.
The popularity of Chancellor Olaf Scholz’s three-party coalition government plummeted amid constant infighting such as next year’s budget. National-oriented parties like Alternative for Germany (AfD), meanwhile, are gaining popularity among a fatigued population.
