Germany: Government expects economic recession for a second year
German Economy Minister Robert Habeck said in Berlin, Monday, that stimulating investment would be beneficial in the short term, explaining that this is exactly what the German government is planning through the growth initiative.
Referring to the states, Habeck said that this initiative shouldn’t be reduced, explaining that the states must agree on plans to improve tax reductions, as the initiative is linked to reducing tax revenues.
Habeck, who is also Scholz’s deputy, said the most important thing is to release the brakes on borrowing now, given the downward revision of economic forecasts, describing the economic situation as very volatile.
Habeck thus confirmed that the German government would lower its economic forecasts.
The German Süddeutsche Zeitung newspaper reported that Habeck expected a contraction in the GDP in the autumn forecasts that will be announced on Wednesday.
Habeck originally expected a slight GDP increase of 0.3% for 2024 – a contraction of 0.2% is now expected, and for 2025, Habeck expects a GDP increase of 1.1%.
