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The
new projection is much lower than the government's previous
forecast of 1.1% growth, issued in October.
Germany has managed no meaningful economic growth in the past
four years as it has struggled to deal with major shifts in the
global economy and with structural challenges of its own.
Preliminary figures released two weeks ago showed that gross
domestic product contracted by 0.2% last year, following a 0.3%
decline in 2023.
The economy is one of the top issues in the campaign for an
early German parliamentary election on Feb. 23. It is being held
seven months before it was originally scheduled after Chancellor
Olaf Scholz's three-party coalition collapsed in November in a
dispute about how to revitalize the economy.
Contenders to lead the next government have made contrasting
proposals on how to get it growing again.
Vice Chancellor Robert Habeck, who is also Germany's economy
minister, said in a statement that “the global crises of recent
years have hit our industry- and export-oriented economy
particularly hard,” although an energy crunch was headed off
after Russia's full-scale invasion and inflation has fallen.
He said it has become increasingly clear that Germany suffers
from fundamental structural problems including a shortage of
skilled labor, “overflowing bureaucracy and investment weakness,
in private as well as public investment.”
Habeck pointed to “the currently high uncertainty” about U.S.
economic and trade policy and uncertainty about Germany's own
post-election course as a brake on sentiment for investment and
consumers.
Germany's main industry lobby group on Tuesday issued an even
gloomier outlook for this year. It forecast that the economy
will shrink again, contracting by 0.1%.
“For years, governments have delayed important reforms, held
back investments and made do with the status quo,” said Peter
Leibinger, the head of the Federation of German Industries, or
BDI.
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