New estimates for Germany’s growth in 2024 could show stagnation. The European powerhouse seems destined for a GDP blocked by a structural crisis on several fronts.
The climate is getting heavy in Germany: the European powerhouse risks being left standing in 2024, with GDP blocked by the economic and industrial crisis.
This is according to rumors leaked by the Berlin government and reported by Bloomberg. According to sources familiar with the matter, the executive led by Scholz is ready to revise downwards its end-of-year growth estimates, with no expansion for 2024.
Such a result would mean another lost year for an economy hit by a series of adverse events and dynamics in recent times. From the suffering of the industrial sector also due to the blocking of gas supplies by Russia and the downsizing of energy policy to the weak demand from China - a key trading partner - and the difficulty of its car giants to switch to electric, Berlin is struggling to recover.
The stagnation scenario, therefore, is becoming increasingly realistic for Germany in this disastrous 2024.
Germany without growth in 2024?
Officials in Berlin are ready to lower their growth forecast for 2024. The update, at best, could estimate a stagnation from the +0.3% previously estimated.
There is no official confirmation of this news yet. However, it would not be all that surprising if Berlin ended the year without growth.
“The fact is that things are looking pretty bad for Germany,”, Jamie Rush of Bloomberg Economics said on Monday. “We will see persistent weakness in the German economy and, as time goes by, the crisis looks more structural than cyclical. Germany has long-term problems that need to be addressed in terms of competitiveness.”
Volkswagen’s threat to close German factories, plus Intel’s decision to postpone a €30 billion investment in a new chip plant in the eastern part of the country, have added to the pessimistic sentiment.
Add to that the risk of Donald Trump’s return to the White House, and Germany is heading for a perfect storm that could further depress GDP, according to rumors coming from Berlin.
The government’s final estimate for 2024 could even be lower than zero growth for Germany, depending on industrial orders and production data, which will be released shortly before the updated GDP forecast, due on October 9, the sources said on condition of anonymity.
Germany in economic and political trouble
The analysis of Germany is also grim and severe from a political point of view.
The prospect of zero growth is a clear admission of failure by the coalition government and another blow to the budget of Chancellor Olaf Scholz, who has not seen the economy expand for two consecutive quarters since taking office in December 2021.
With elections now less than a year away, the window in which he could gain significant support before turning to voters is also dangerously narrowing, whose discontent has already been evident this year in ballots for the European Parliament and in eastern states (where the far right is surprisingly strong).
The weaker growth outlook also risks further damaging tax revenues and complicating the government’s efforts to plug a budget hole in the 2025 budget plan.
However, it would also allow for higher net borrowing of about €2 billion more, under a rule that allows the government to take on more debt in times of economic hardship, the people said. Debt could thus save Europe’s largest economy, so far a champion of austerity.
Original article published on Money.it Italy 2024-09-30 15:33:56. Original title: Germania, il PIL non crescerà nel 2024
