Berlin: German financial system in “troubled waters”, GDP will develop by solely 0.2% in 2024 | EUROtoday

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The key factors

  • GDP will develop by 0.2% in 2024
  • Sustainable reforms are wanted
  • Skilled labor is the most important problem

«The financial system is in troubled waters. We are rising from the disaster extra slowly than hoped.” As announced, Economy Minister Robert Habeck confirmed the report with the government's economic forecasts: Germany's GDP will grow by only 0.2% this year.

The reasons for the stagnation
The global economic environment is unstable and global trade growth is historically low, which presents a challenge for an exporting nation like Germany.

The need to fight inflation has led to high interest rates, which have had a negative impact on business investments.

Germany is also seeing corrections especially in the construction sector. Among special factors, the federal government must prioritize budgetary discipline following the ruling of the Federal Constitutional Court last November.

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What is needed to get out of the crisis: the government's recipe
For Habeck, the biggest challenge for Germany is the labor shortage. «It will get worse in the coming years and will slow down potential growth. We need all the knowledge and skills, all the hands and minds, all the talents. Anything we can do to get people to work, we will have to do. This is about education, better opportunities for women and better incentives for older people to voluntarily work longer, it is about the implementation of the Skilled Immigration Act and better integration of refugees into the labor market.”