German economy to stagnate in 2024 – DIHK

Germany’s economic recovery remains elusive, with the country’s largest business association, the German Chambers of Commerce and Industry (DIHK), forecasting stagnation for the eurozone’s powerhouse economy this year, Reuters reported on Thursday.

However, the outlook is slightly more upbeat compared to earlier projections, with the DIHK now expecting no contraction after initially anticipating a 0.5 per cent shrinkage at the beginning of the year.

The DIHK predicts that private consumption will buoy the economy, projecting 1.0 per cent growth as inflation is estimated to ease from 5.9 per cent in 2023 to 2.3 per cent this year.

According to the DIHK survey encompassing 24,000 companies from various sectors and regions, recent hopes of a resurgence in foreign business or domestic demand have not come to fruition.

DIHK Managing Director Martin Wansleben expressed concern about the current business environment, particularly in the industrial sector, where pessimism prevails.

Although there is a slight improvement in business expectations, with fewer companies expressing negative sentiments compared to previous surveys, export prospects remain subdued.

Investment willingness among companies remains weak, with many yet to reach pre-pandemic investment levels. Weak domestic demand, high energy costs, and a shortage of skilled workers are identified as key business risks by surveyed companies.