Close-up of euro bills with German flag. The German economy hits: growth has been cut in half despite the massive budget boost. Credits: Shutterstock, Lufmaster
Germany’s economic problems deepened on March 17, as one of the nation’s top think tanks halved its growth forecast for the year despite massive spending looming on the horizon.
Based in Munich If Institute Currently, Germany’s GDP is expected to craze at just 0.2% in 2024, with the January forecast cutting by half of 0.4%. This comes even when political heavyweights are seeking 1 trillion euros spending It is intended to activate Infrastructure and defense over the next 10 years.
“The German economy is stomping on the water,” warned Timo Walmerschauser, head of forecasting at IFO. “Even with a regaining purchasing power, consumer sentiment remains restrained and businesses are reluctant to invest.”
The warning shot comes as the central right Christian Democrats (CDU) led by Friedrich Merz, and the dominant Social Democrats (SPD) push for dramatic changes in German budget rules and abolish the country’s long-standing obsession with fiscal discipline.
Will big spending become a magic bullet in Germany?
Economists believe that if the spending package is successfully implemented, it could rekindle investors’ trust and encourage consumers to loosen the strings of their wallets.
“Reliable economic policies are essential to generating confidence and inspire investment,” Wollmershäuser added.
Deutsche Bank analysts say it will be handed over in Parliament tomorrow, and green light is expected by the Federal Council on Friday, with 3-4% of GDP likely to be added to Germany’s budget.
“Don’t underestimate how big this package is,” the analyst said. Notes to clients.
What’s next for Europe’s biggest economy?
With Germany’s economy stagnating and global uncertainty growing, all eyes are looking to see if this trillion eurogamble will pay off. Will cash floods be enough to separate Europe’s biggest economy from its slump?
The German economic engine now appears to be running in smoke, and its leader is rushing for a jump start.
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