Skip to main content
Economy and Finance

Economic forecast for Germany

The latest macroeconomic forecast for Germany. 

Indicators 2023 2024 2025
GDP growth (%. yoy) -0.3 0.3 1.2
Inflation (%. yoy) 6.0 2.8 2.4

Economic activity in Germany is estimated to have contracted by 0.3% in 2023, as projected in autumn. Private consumption suffered from a loss in purchasing power. High building and borrowing costs on top of labour shortages and elevated energy prices depressed investment in construction and energy-intensive sectors.

Sentiment indicators continue to be weak, with some indicators in January having reached their lowest levels since the COVID-19 crisis, pointing to subdued economic growth in the first half of 2024. Investment growth is projected to remain low relative to pre-pandemic values, weighed down by downbeat investor sentiment entering the year. Labour shortages continue to be a bottleneck to activity. A trade-led recovery is also unlikely, as exports and imports are set to grow at broadly the same pace in both forecast years. Tighter fiscal policy conditions are also expected to have a dampening impact on short-term growth prospects. On the positive side, market financing conditions have eased moderately and further easing is expected through the bank lending channel. In addition, real incomes are expected to benefit from a robust labour market and rising real wages, which are set to support private consumption over the forecast horizon.

Overall, real GDP is forecast to increase by 0.3% in 2024 and 1.2% in 2025. For 2024, this implies a downward revision from 0.8% projected in the Autumn Forecast, while the forecast for 2025 remains unchanged. 

HICP inflation decelerated from its peak of 11.6% in October 2022 to 6.0% in 2023 as a whole and to 3.1% in January 2024. This reduction is mainly driven by the decline in wholesale energy prices and the introduction of energy support measures, which were discontinued in November 2023. HICP inflation is projected to reach 2.8% in 2024 and 2.4% in 2025. This is broadly in line with the Autumn Forecast. Inflation in both years is forecast to be driven mainly by the services sector, where wage growth is temporarily keeping inflation elevated as expected in the Autumn Forecast 2023. By contrast, energy price growth is set to contribute only slightly to inflation going forward.