Economists Lower Growth Forecasts as German Economy Faces Structural Challenges

Three leading economic research institutes have significantly lowered their forecasts for German economic growth, citing structural problems such as climate change, energy prices, digitalization, demographics, competition from China, high corporate taxes, and bureaucratic burdens. The industry and construction sectors are shrinking, investments and exports are stagnant, and inflation is decreasing without leading to increased consumption.

While there are some bright spots in the retail and construction industries, the overall business climate in the medium-sized sector has deteriorated. The order intake of the German industry has increased in July, driven by large orders in the aircraft industry, but experts warn of a slowdown in the industrial sector.

The weakness of the German economy is seen as alarming, as it poses risks to education, defense, climate protection, pensions, and social spending. Commentators criticize the government for downplaying the importance of growth and failing to address issues such as the labor shortage, bureaucracy, and infrastructure.