'German economy is not picking up speed': IfW cuts economic forecast for Germany

Germany's economy is facing challenges as it is not gaining momentum, according to the Institute for the World Economy (IfW). The country's economic growth forecast for 2023 has been revised down from 1.1 percent to 0.5 percent due to weak consumption and investment.

However, the European Central Bank (ECB) is expected to loosen its monetary policy, which could stimulate private consumption and improve the export business. Inflation is projected to be around 2 percent in the next two years, showing a decrease from 5.9 percent in 2023. The unemployment rate is also predicted to rise from 5.7 percent in 2022 to 6.1 percent in 2025. The budget deficit is expected to decrease to 1.7 percent of economic output in the next two years.

It is not until 2026 that growth is forecasted to reach 1.1 percent again. The challenges faced by the German economy include a structural crisis, slow response of old core industries to change, and the detrimental impact of the asylum debate on attracting skilled workers.

The situation calls for reliable policy measures and increased focus on free trade to address the declining growth potential.