Weak consumption: DIW lowers financial forecast – stagnation anticipated for 2024 | EUROtoday

The German Institute for Economic Research (DIW) has revised its financial forecast for the present yr downwards. Instead of a slight development in gross home product of 0.4 p.c, the financial researchers now anticipate stagnation of zero p.c. “The hoped-for recovery in industry that we had at the beginning of the year has not materialized,” stated DIW financial chief Geraldine Dany-Knedlik.

“Private consumption has also been weaker than we initially expected.” Consumers proceed to favor to place their cash apart relatively than spend it. The present financial savings fee is 10.8 p.c.

Three main financial analysis institutes had already considerably decreased their forecasts. The Munich-based Ifo Institute and the Leibniz Institute for Economic Research in Halle (IWH) additionally anticipate zero financial development for this yr, whereas the Leibniz Institute for Economic Research in Essen (RWI) expects 0.1 p.c.

However, the financial upturn has not been canceled, however solely postponed, harassed Dany-Knedlik. The DIW is already anticipating development of 0.9 p.c for subsequent yr and 1.4 p.c for 2026.

Increased actual wages ought to enhance consumption

The most important driver of this delayed financial restoration can be consumption. Economic researchers attribute this primarily to the numerous enhance in actual wages, significantly within the public sector and within the metallic and electrical industries. “This should support private consumption,” they stated.

There are additionally optimistic alerts in international commerce and investments on account of the rate of interest turnaround that the European Central Bank initiated in June. “However, German exports are likely to be driven more by services in the IT sector or travel in the future,” the DIW stated.

Global financial dangers stay, such because the re-election of Donald Trump as US president or an extra escalation of the wars in Ukraine or the Middle East. “Home-grown problems could also hit the economy hard,” it stated. One danger issue is the rise of the AfD.