IMF cuts forecasts for German economy this year and next

By Maria Martinez

BERLIN (Reuters) - The German economy is expected to stagnate this year, the International Monetary Fund said on Tuesday, cutting its forecast for Europe's biggest economy, while growth is expected in all the other G7 countries.

The IMF had forecast 0.2% growth for Germany in its previous forecasts.

This downward revision follows a cut in the German government's forecasts to a 0.2% contraction in 2024 from 0.3% growth previously expected.

Germany's economy was already the weakest among its large euro zone peers and other G7 countries last year, with a 0.3% decline in gross domestic product.

For 2025, the IMF forecast Germany's economy would grow by 0.8%, having previously projected growth of 1.3%

Meanwhile, the euro zone economy is expected to grow by 0.8% in 2024 and 1.2% in 2025.

Persistent weakness in manufacturing looks set to weigh on growth for countries such as Germany and Italy, the IMF said in its report.

Demand for German industrial goods has continued to weaken, the latest industrial orders data showed.

Whereas Italy is expected to benefit from the European Union's National Recovery and Resilience Plan, Germany is experiencing strain from fiscal consolidation and a sharp decline in real estate prices, the IMF added.

Inflation in Germany is expected to fall to 2.4% this year from 6.0% last year, and decline to 2.0% in 2025.

(Reporting by Maria Martinez, Editing by Miranda Murray and Christina Fincher)