Germany's economic recovery remains a test of patience

BERLIN (Reuters) – The D. Institute said. any. Berlin-based W Research said the German economy is not recovering as quickly as expected, anticipating a recession early in the year.

According to DIW, German GDP is expected to contract by 0.1% in the first quarter, after -0.3% in the last three months of 2023. Two consecutive quarters of decline in output is defined as a technical recession.

“As inflation continues to decline, private consumption will once again become the main driver of the economic recovery starting in the second quarter,” said Tim Boehnke of the DIW Institute.

Although the German economy is expected to return to modest growth by the second quarter, it will witness a recession this year, according to the institute, which lowered its previous growth forecast by 0.6%.

The DIW Institute in Berlin is the latest economic institute to lower its forecasts. Two German institutes lowered their growth estimates for 2024 yesterday, in another blow to the euro zone's largest economy.

“We are a little more pessimistic than our colleagues,” said Marcel Fratcher, president of the DIW, while presenting the forecast.

The institute added that GDP is expected to rise by 1.2% in 2025, a slight increase from the previous forecast of 1.0%.

(Translated by Enrico Chiacovelli, Edited by Andrea Mandala)