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Habeck cuts economic forecast to 0.2 percent: “dramatically bad”

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Habeck cuts economic forecast to 0.2 percent: “dramatically bad”

Economics Minister Robert Habeck has to lower the forecast for the German economy. Picture Alliance

The federal government is lowering its forecast for economic growth this year from 1.3 percent to just 0.2 percent.

Economics Minister Robert Habeck announced this and called the prospects “dramatically bad”.

“We can’t go on like this,†said Habeck. Next week he will officially present the new forecast with the annual economic report.

The federal government is significantly lowering its economic forecast for this year from 1.3 to just 0.2 percent economic growth. Economics Minister Robert Habeck announced this to craftsmen in Leipzig on Wednesday. This is “dramatically bad,” said Habeck, adding: “We can’t go on like this.”

Habeck will officially present the new economic forecast next week with the annual economic report. In 2023, German economic output shrank by 0.3 percent. Economists assume that the gross domestic product (GDP) will also fall at the beginning of the year. Germany is therefore in a recession.

Habeck’s reasons for the new economic forecast

Habeck cited budget savings as a result of the Constitutional Court’s debt ruling as one of the reasons for lowering the forecast. As a result, many people would have less money. Habeck had previously estimated the effect at 0.5 percentage points of growth. Now the government is lowering its forecast by 1.1 percentage points.

Even with the lowered forecast of 0.2 percent, it is still in the middle range of forecasts. Quite a few economists even expect the German economy to continue to shrink in 2024 as a whole.

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“Overall, we need to invest more in this country and get economic growth going,†said Habeck on Wednesday at a craft forum in Leipzig.

Both Habeck and Finance Minister Christian Lindner (FDP) want to strengthen the competitiveness of the German economy. However, their suggestions for this are different.

Habeck was greeted with occasional boos from the craftsmen. The Green politician again advocated a reform of the debt brake. “It shouldn’t fail because of me.” However, the FDP and the Union reject a reform. Habeck had also suggested financing relief for companies through a special fund.

When asked what the craft’s most pressing problems were, Habeck said that the bureaucracy was oppressive. He announced countermeasures, but at the same time pointed out that the federal states were responsible for many rules. There is still a lack of workers, meaning the economy cannot run at full steam. In addition, the craft sector is suffering from the economic weakness. “People have less money, they are holding back money, companies are not investing.“

Crafts President Jörg Dittrich criticized the traffic light coalition. There is no problem of knowledge. There is a lot on the table that would be ready for a decision. But the government has to do it. Saxony’s Prime Minister Michael Kretschmer (CDU) called for a change in the “basic course” of economic policy. The state cannot regulate everything via “microcontrol.”

With material from dpa.

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