A six-monthly “collective diagnosis” of the German economy was released by a group of leading economic think tanks on Wednesday. The report, titled “German economy ailing — reforming the debt brake is no cure-all,” lowered the growth forecast from 1.2% to near-stagnation, at 0.1% for the year.
According to the summary of the report, Germany’s economy is struggling due to a phase of economic weakness accompanied by dwindling growth forces. Both economic and structural factors are contributing to the sluggish overall economic development. However, it predicted that the situation would start to improve soon.
The report highlighted that consumers and their recovering purchasing power, as inflation sinks and wages rise in many sectors, would be the most important fuel for the economic recovery. It also noted that frequent strikes impacting rail network and air travel in Germany have been one contributing factor to the economic challenges faced by the country. Despite these challenges, however, it indicated that Germany’s economy is forecasted to return to slight growth in the near future.
