German economic advisers to cut 2024 growth forecast, sources say

By Holger Hansen

BERLIN (Reuters) - The German Council of Economic Experts expects 0.2% gross domestic product growth this year, according to sources who have seen a draft document that will be presented on Wednesday.

For 2025, the economic experts forecast 0.9% growth, sources said on Tuesday.

In its autumn forecast published in November 2023, the panel of experts forecast growth of 0.7% for 2024.

The German economy shrank by 0.2% last year, the weakest performance among big euro zone economies, as high energy costs, lacklustre global orders and record high interest rates took their toll.

At the start of this year, Germany skirted a recession, growing by 0.2% in the first quarter from the previous three-month period in adjusted terms. In the last quarter of 2023, the economy shrank 0.5%.

The economic experts are somewhat less optimistic for 2024 than the German government, which expects 0.3% GDP growth this year and 1.0% in 2025.

Private consumption is expected to contribute significant growth momentum as real wages are expected to rise in a resilient labour market.

Inflation is likely to be at 2.4% this year, falling to 2.1% in 2025. Inflation was at 5.9% last year, hitting private consumption.

As inflation eases, it can be assumed that the first interest rate cuts by the European Central Bank will take place over the course of the year, improving financing conditions in areas such as construction.

(Reporting by Holger Hansen, writing by Maria Martinez, Editing by Kirsti Knolle, Madeline Chambers and Nick Macfie)