Economy annual economic report
Habeck’s ministry expects a long period of weakness for Germany
Status: 19.01.2024 | Reading time: 2 minutes
Economics Minister Robert Habeck (Greens)
Source: dpa/Georg Wendt
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According to a draft of the new annual economic report, “there is a risk of a sustained phase of economic weakness” in Germany. The challenges “speak to a scenario with low economic growth for the foreseeable future”.
Federal Minister of Economics Robert Habeck (Greens) expects only meager growth rates for the German economy in the coming years. This emerges from the draft of the new annual economic report, from which the “Spiegel” quotes. Against the background of accelerated demographic change, neglected location factors and a global economy characterized by geopolitical dangers, “there is a risk of a sustained phase of economic weakness,” says the draft. The challenges “speak to a scenario with low economic growth for the foreseeable future”.
According to the draft, the government only expects annual potential growth of 0.6 to 0.8 percent for the years up to 2028. The increased transition of baby boomers into retirement alone will cost Germany 0.5 percentage points of growth every year over the next decade. For 2024, the federal government “expects slight overall economic growth despite the restrictive monetary policy and global economic conditions,” the report says.
The draft does not yet contain an exact figure for this; it will only be added shortly before the report is published at the end of January in order to take current developments into account. As things currently stand, Habeck wants to significantly reduce the federal government’s forecast from the fall of 1.3 percent to less than one percent. “The forecast dynamics are therefore significantly lower than predicted in the Federal Government’s autumn forecast,” the draft states. The reason for the decline in growth is also the savings that became necessary after the budget ruling of the Federal Constitutional Court in November.
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In order to get the economy back on a long-term growth path, “much more dynamic investment activity will be necessary in the coming years”. With its Growth Opportunities Act, the federal government is providing tax policy incentives for private investments with a relief volume of 32 billion euros by 2028. To ensure that more older workers stay in their jobs, the federal government is examining ways to make retirement at 63 less attractive.