IMF Forecasts Sluggish Growth for Germany in 2024 and 2025

IMF projects Germany's GDP growth to lag behind other G7 nations, citing structural issues and the impact of Middle East conflict on global economy. Weak performance could have ripple effects on EU and world markets.

Wojciech Zylm
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IMF Forecasts Sluggish Growth for Germany in 2024 and 2025

IMF Forecasts Sluggish Growth for Germany in 2024 and 2025

The International Monetary Fund (IMF) has released its latest World Economic Outlook, which presents a bleak depiction for Germany's economic growth in the coming years. According to the IMF projections, Germany's GDP is expected to rise by just 0.2% in 2024 and 1.3% in 2025, making it one of the slowest-growing major economies among the G7 countries.

In contrast, the United States is expected to expand by 2.7% in 2024 and 1.9% in 2025, outpacing other G7 nations. The United Kingdom, another struggling economy, is set to be one of the slowest-growing major economies this year, with GDP forecast to rise by 0.5% in 2024 and 1.5% in 2025.

The IMF attributes Germany's weak economic performance to several factors, including structural problems such as the decline in the working population and barriers to investment . Leading economic research institutes are even more pessimistic about Germany's growth prospects, forecasting only 0.1% growth for this year.

Why this matters: Germany's sluggish economic growth has significant implications for the European Union and the global economy. Given the size of Germany's economy in Europe, its performance can have a ripple effect on its trading partners and the overall stability of the region.

The IMF report also highlights the impact of the escalating Middle East conflict on the global economy and financial markets. The IMF's economic counselor, Pierre-Olivier Gourinchas, warned that a 15% rise in oil prices and higher shipping costs from the conflict could lead to a 0.7% increase in inflation and damage business confidence and investment.

Germany's weak economic growth is a cause for concern, as it lags behind other G7 countries. The IMF's projections for 2024 and 2025 show that Germany is expected to have the lowest growth rates among the major economies, with the United States and other nations outpacing it. Structural issues, such as a declining workforce and investment obstacles, are contributing to Germany's economic challenges. As the IMF warns of the potential impact of the Middle East conflict on global inflation and business confidence, Germany faces an uphill battle to boost its economic performance in the coming years.

Key Takeaways

  • IMF forecasts Germany's GDP to grow just 0.2% in 2024 and 1.3% in 2025, slowest in G7.
  • US economy expected to outpace G7 peers, growing 2.7% in 2024 and 1.9% in 2025.
  • Germany's weak growth due to structural issues like declining workforce and investment barriers.
  • IMF warns Middle East conflict could raise global inflation by 0.7% and hurt business confidence.
  • Germany faces economic challenges, lagging behind other major economies in projected growth.