The German Ifo Institute slightly increases its GDP forecast for 2024

BERLIN (Reuters) – Germany’s Ifo Institute on Thursday slightly raised its forecast for economic growth in Europe’s top economy for 2024, citing stronger consumer purchasing power and the recovery of global trade in goods and industrial production in the second half.

Ifo raised its growth forecast to 0.4% from 0.2% in March, roughly in line with the German government’s spring projection of 0.3% growth.

“New hope is now emerging,” says Ifo economist Timo Wollmershaeuser. “The German economy is slowly working its way out of the crisis. The second half of 2024 should be significantly better than the first.”

The German economy, which performed the weakest among the major eurozone countries last year, is expected to gain some momentum in its recovery over the course of this year, with inflation expected to fall and nominal wages to rise.

“As the year progresses, the purchasing power of private households should continue to gain momentum and the overall economic recovery should gain speed as the consumer economy normalizes,” Wollmershaeuser said.

Global trade in goods and global industrial production should continue to recover, especially from the second half, helped by a gradual rebound in investment as monetary policy is set to ease in industrialized countries, Ifo said.

Ifo maintained its forecast for economic growth of 1.5% in 2025, while inflation is expected to fall from 5.9% last year to 2.2% this year, before falling to 1.7% next year.

(Reporting by Rene Wagner and Miranda Murray; Editing by Madeline Chambers)

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