How households will nudge up German economy this year – DIW experts

Admin I Saturday, June 15, 2024

BERLIN – Forecasters at the Berlin-based DIW economic research institute have raised their growth outlook for Germany, with rising private consumption accounting for the upturn.

Growth in Europe’s biggest economy is now expected to be 0.3% for this year, DIW said on Friday. That is still modest, but an improvement over the institute’s previous forecast in March of 0.1%.
The rate is expected to accelerate to 1.3% for 2025.

DIW said households in Germany are likely to feel more income security in the coming months, which in turn should fuel overall economic activity.

DIW attributes this confidence to one-off payments by employers – including inflation compensation bonuses – and wage increases, some of which have yet to take full effect.

“All signs are pointing to green for private consumption, which should become the most important driver of growth,” said DIW economic forecaster Geraldine Dany-Knedlik.

Low-income households are also likely to have higher incomes at their disposal, said the DIW experts.