The forecasts are part of the government’s spring projections, which Economy Minister Robert Habeck presented on Wednesday and Reuters published exclusively last week.
“As the year progresses, we are now seeing signs of a slight economic upturn and that the economy is slowly emerging from its weak phase,” Habeck said during the presentation in Berlin.
Private consumption is expected to contribute significant growth momentum thanks to the foreseen rise in real wages in a resilient labour market.
In 2025, the government expects gross domestic product to grow by 1.0%, according to the projections.
Inflation is expected to fall to 2.4% this year, versus a previous projection of 2.8%. Inflation was at 5.9% last year, taking its toll on private consumption.
“Prices have fallen faster than many predicted,” Habeck said.
For 2025, the government sees inflation falling further to 1.8%, below the 2% target of the European Central Bank.
The German economy, Europe’s biggest, was the weakest among its large euro zone peers last year, as high energy costs, feeble global orders and record-high interest rates took their toll.
Although inflation is expected to ease this year, growth is forecast to remain relatively weak.
Source: Economy - investing.com
