The Organization for Economic Cooperation and Development (OECD) has revised its economic growth forecast for Germany downward. This adjustment comes as the global economy faces pressures from ongoing wars and crises.
The OECD has once again lowered its economic growth forecast for Germany. According to the economic outlook released on Wednesday in Paris, OECD economists now expect only a 0.1% increase for the current year. This marks a further reduction from the interim report in May, which had already decreased the growth forecast from 0.3% (projected in February) to 0.2%.
For the coming year, the OECD anticipates more momentum in the German economy, projecting a growth of 1.0%. This is slightly lower than the 1.1% increase expected for 2025 in the May report.
Global economic outlook
Globally, the OECD forecasts a growth of 3.2% for both this year and the next. For the Eurozone, it projects an increase of 0.7% and 1.3% respectively.
In the United States, growth is expected to slow down but will be cushioned by monetary policy easing, with projections of 2.6% growth for 2024 and 1.6% for 2025. China’s growth is anticipated to weaken to 4.9% in 2024 and 4.5% in 2025.
OECD Secretary-General Mathias Cormann stated, “The global economy is beginning to turn the corner, with declining inflation and robust trade growth. To improve medium-term growth prospects, we need to accelerate the pace of structural reforms, including through pro-competition policies, for example by reducing regulatory barriers in services and network sectors.”
Risk factors: Crises and wars
According to the OECD forecast, falling inflation, rising incomes, and less restrictive monetary policies in many countries are having a stabilizing effect on the economy. However, significant risks remain. Ongoing geopolitical and trade tensions, such as those resulting from Russia’s war of aggression against Ukraine and developing conflicts in the Middle East, could reignite inflation and impact global economic activity.
Growth could also weaken more than expected due to cooling labor markets. On the other hand, rising wages could boost spending, and further declining oil prices could accelerate the decrease in inflation.
The Paris-based Organization for Economic Cooperation and Development (OECD) unites countries committed to democracy and market economies. In addition to major economies like Germany, the USA, and Japan, emerging countries such as Mexico and Chile are now also members.
