The German Council of Economic Experts presented its latest annual report to the German government on November 13, 2024. Prof. Dr. Veronika Grimm is Professor of Energy Systems and Market Design at the University of Technology Nuremberg and has been a member of the most important body for economic issues since 2020. Entitled “Addressing shortcomings, modernizing resolutely”, the report looks at Germany’s current economic situation and provides the government with policy recommendations
The five economic experts conclude that the German economy is still stagnating. Gross domestic product has only grown by 0.1% in real terms over the past five years. This means that Germany’s economic development continues to lag behind in international comparison. The weakness of industry and the duration of the weak phase suggest that the German economy is being held back by structural problems as well as cyclical ones.
The German Council of Economic Experts expects the German economy to stagnate in 2024 and only recover slightly in the course of 2025. Production and gross value added in the manufacturing sector have declined in the current year. Investments are also declining. At the same time, the recovery of the global economy is not leading to an increase in exports to the usual extent. Despite significant real wage growth in 2023 and 2024, private households have increased their consumption only slightly so far. The German Council of Economic Experts therefore expects price-adjusted gross domestic product (GDP) in Germany to fall by 0.1% in 2024. Pessimistic expectations regarding further economic development and a slowdown in real wage increases are likely to mean that private consumer spending will only increase slightly in 2025. GDP is also likely to grow only slightly next year at 0.4%. Economic development in Germany is significantly weaker than in other advanced economies. In the USA, GDP is already more than twelve percent above the pre-pandemic level, while in the eurozone it is a good four percent higher. Consumer price inflation is falling significantly and is approaching the target of the European Central Bank. The inflation rate is expected to average 2.2% in 2024, with the Council of Experts forecasting a rate of 2.1% for 2025.
This year, three chapters of the Council of Economic Experts’ report deal with future-oriented public spending, the digitalization of the financial system and the housing market. You can find the annual report here.
The German Council of Economic Experts presented its latest annual report. Copyright: Sachververständigenrat Wirtschaft/Stefan Boness
About the German Council of Economic Experts
The German Council of Economic Experts supports politicians and the public on economic policy issues and topics. It was founded in 1963 as an independent body and consists of the members Prof. Dr. Veronika Grimm, Prof. Dr. mult. Dr. Dr. h.c. Ulrike Malmendier, Prof. Dr. Dr. h.c. Monika Schnitzer (Chairwoman), Prof. Dr. Achim Truger and Prof. Dr. Martin Werding. With its regularly published reports, the Expert Council aims to help the public and decision-makers in politics, business and society to form an informed opinion on economic policy developments in Germany.
The German Council of Economic Experts presented its latest annual report to the German government on November 13, 2024. Prof. Dr. Veronika Grimm is Professor of Energy Systems and Market Design at the University of Technology Nuremberg and has been a member of the most important body for economic issues since 2020. Entitled “Addressing shortcomings, modernizing resolutely”, the report looks at Germany’s current economic situation and provides the government with policy recommendations
The five economic experts conclude that the German economy is still stagnating. Gross domestic product has only grown by 0.1% in real terms over the past five years. This means that Germany’s economic development continues to lag behind in international comparison. The weakness of industry and the duration of the weak phase suggest that the German economy is being held back by structural problems as well as cyclical ones.
The German Council of Economic Experts expects the German economy to stagnate in 2024 and only recover slightly in the course of 2025. Production and gross value added in the manufacturing sector have declined in the current year. Investments are also declining. At the same time, the recovery of the global economy is not leading to an increase in exports to the usual extent. Despite significant real wage growth in 2023 and 2024, private households have increased their consumption only slightly so far. The German Council of Economic Experts therefore expects price-adjusted gross domestic product (GDP) in Germany to fall by 0.1% in 2024. Pessimistic expectations regarding further economic development and a slowdown in real wage increases are likely to mean that private consumer spending will only increase slightly in 2025. GDP is also likely to grow only slightly next year at 0.4%. Economic development in Germany is significantly weaker than in other advanced economies. In the USA, GDP is already more than twelve percent above the pre-pandemic level, while in the eurozone it is a good four percent higher. Consumer price inflation is falling significantly and is approaching the target of the European Central Bank. The inflation rate is expected to average 2.2% in 2024, with the Council of Experts forecasting a rate of 2.1% for 2025.
This year, three chapters of the Council of Economic Experts’ report deal with future-oriented public spending, the digitalization of the financial system and the housing market. You can find the annual report here.
About the German Council of Economic Experts
The German Council of Economic Experts supports politicians and the public on economic policy issues and topics. It was founded in 1963 as an independent body and consists of the members Prof. Dr. Veronika Grimm, Prof. Dr. mult. Dr. Dr. h.c. Ulrike Malmendier, Prof. Dr. Dr. h.c. Monika Schnitzer (Chairwoman), Prof. Dr. Achim Truger and Prof. Dr. Martin Werding. With its regularly published reports, the Expert Council aims to help the public and decision-makers in politics, business and society to form an informed opinion on economic policy developments in Germany.