The German government admitted that GDP will only grow by 0.50 % this year, half of what was expected. Possible causes include stagnant exports and a lack of private investment.

The country had a growth forecast of 1%, but this has been overshadowed by external geopolitical conflicts. This was stated by Minister Katherina Reiche during the presentation of her data in Berlin, emphasizing that the war in Iran has led to an increase in energy and raw material prices. “This will place a burden on private households and increase costs for the German economy as a whole,” the minister noted.

For 2027, German GDP is estimated to grow by only 0.9 %, not 1.3 % as previously expected, “in a context of a general weakening economy compounded by an upward revision of the government’s inflation forecast.”

The trend will be upward; consumer prices are expected to rise by 2.7 % this year and 2.8 % next year. “Inflation is primarily limiting private households, which are projected to increase their consumer spending by only 0.4 % after 2026 and 0.5 % in 2027, a significant reason for the weak growth outlook,” Reiche added.

The current scenario in Germany is characterized by a decline in foreign trade, stagnant exports, and a loss of industrial capacity in the face of international competition.

Regarding public consumption, an increase of 2 % is projected for 2026 and 1.3 % next year. “The expansion of energy price subsidies is also contributing to this. At the same time, government demand is driving investment: investment in equipment is projected to increase by 1.1 % this year and 4.4 % next year.”

M.Pino

Source: abc.es

(Reference image source: Sergio Aguirre on Unsplash)

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