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DIW Berlin Economic Outlook: Industry Sputtering Globally while the German Economy Stagnates

Author

Listed:
  • Geraldine Dany-Knedlik
  • Nina Maria Brehl
  • Hella Engerer
  • Angelina Hackmann
  • Pia Hüttl
  • Konstantin A. Kholodilin
  • Frederik Kurcz
  • Laura Pagenhardt
  • Marie Rullière
  • Jan-Christopher Scherer
  • Teresa Schildmann
  • Ruben Staffa
  • Kristin Trautmann

Abstract

The German economy continues to stagnate. After it appeared to finally be growing at the start of 2024, it experienced a slight setback in the second quarter. Although incomes are rising and inflation is now near the two-percent target, people in Germany are saving their money. As investments and exports faltered due to the sluggish industrial sector, the upturn has been delayed for the time being. Overall economic output is likely to stagnate in 2024, but it will likely pick up at the end of the year; growth of 0.9 and 1.4 percent is expected in 2025 and 2026, respectively. Private consumption, which will increase more slowly than expected but still provide a stimulating effect, will primarily support this growth. As interest rates continue to fall worldwide, foreign trade and investments are also supporting growth. The global economy has returned to its recovery path, but expanded more weakly in the second quarter compared to the first. Growth in China in particular has stalled somewhat, and there are also signs of an upcoming economic slowdown in the United States. Following growth of 3.8 percent in 2024, the global economy is expected to expand by only 3.5 percent in 2025, but develop more dynamically again in 2026.

Suggested Citation

  • Geraldine Dany-Knedlik & Nina Maria Brehl & Hella Engerer & Angelina Hackmann & Pia Hüttl & Konstantin A. Kholodilin & Frederik Kurcz & Laura Pagenhardt & Marie Rullière & Jan-Christopher Scherer & Te, 2024. "DIW Berlin Economic Outlook: Industry Sputtering Globally while the German Economy Stagnates," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 14(35/36/37/), pages 223-237.
  • Handle: RePEc:diw:diwdwr:dwr14-35-1
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    More about this item

    Keywords

    Business cycle forecast; economic outlook;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • F01 - International Economics - - General - - - Global Outlook

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