For 2025, the IMF expects the German economy to grow by 1.3 percent, which is still below the average for the G7 countries. picture alliance / AA | Celal Gunes
The IMF is lowering its forecast for the German economy and only expects growth of 0.2 percent in 2024.
According to the IMF, Germany remains at the bottom of the G7 industrial nations in terms of growth.
In the long term, the IMF is concerned about structural problems such as the decline in the working population and barriers to investment in Germany.
The International Monetary Fund (IMF) further worsened its forecast for the German economy in Washington on Tuesday. For the current year, the IMF only expects economic growth of 0.2 percent. In January, the IMF had assumed an increase of 0.5 percent. Despite a slight increase in the forecast for the global economy from 3.1 percent to 3.2 percent, according to the IMF, Germany remains at the bottom of the leading Western G7 industrial nations in terms of growth.
The IMF expects growth of 0.2 percent for 2024 and 1.3 percent for 2025
For 2025, the IMF expects the German economy to grow by 1.3 percent, which is still below the average for the G7 countries. Italy will then be at the bottom with growth of just 0.7 percent. The forecast for 2025 was lowered by 0.3 percentage points compared to January, primarily due to continued weak consumer sentiment. In the long term, the IMF is concerned about structural problems such as the decline in the working population and barriers to investment in Germany.
Leading economic research institutes are even more pessimistic and are only forecasting growth of 0.1 percent for Germany this year. Slightly better growth of 1.4 percent is expected for the coming year, but this is still below the level of the other G7 countries.
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National debt, tax increases and spending cuts could further weaken the economy in many countries
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For China, the IMF continues to see an impairment of the economy due to the ongoing downturn in the real estate sector. Domestic demand is likely to remain weak for some time unless far-reaching reforms are implemented. For China, the IMF continues to forecast economic growth of 4.6 percent this year and a slight decline to 4.1 percent in 2025.
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Russia’s IMF forecast was also revised upwards
The IMF has raised its forecast for Russia. The fund now expects growth of 3.2 percent for the current year, after 2.6 percent in January. However, lower growth of 1.8 percent is expected for next year, after 1.1 percent in January. According to the IMF, this correction reflects the waning impact of high investment and robust private consumption, previously supported by rising wages and a tight labor market.
Experts point out that the Russian economy benefited from high military spending, which boosted production. Social transfers have also boosted consumption. What could prove problematic, however, is that Russia is cut off from the international financial system and has limited access to technology.
Despite the West’s far-reaching sanctions against Russia, Russian oil continues to trade above the price cap of $60 (57 euros) imposed by the G7 countries and the EU. Russia relies on a so-called shadow fleet to facilitate the transport of its oil, as these ships are not subject to the restrictions of Western shipping companies and insurance companies.
Global inflation will not fall below five percent until 2025
For 2024, the IMF forecasts an average global inflation rate of 5.9 percent, which corresponds to a slight increase of 0.1 percentage points compared to the January forecast. Next year, the inflation rate is expected to be 4.5 percent, also a slight increase compared to the previous estimate of 4.4 percent. The IMF is more optimistic for the industrialized countries and expects an inflation rate of an average of two percent next year. However, there are fears that progress towards the inflation target has stalled since the start of the year, which could force central banks to rethink.
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AA/dpa