Zoom Image

OECD forecast: Growth in Germany is likely to be weaker than in other industrialized countries

Photo: Marcus Brandt / dpa

The global economy is recovering, according to the OECD. The bottom seems to have been passed, as energy prices and headline inflation are falling, supply bottlenecks are easing and the financial situation of private households is relatively solid. This was announced by the Organisation for Economic Co-operation and Development (OECD) in Paris.

In its new economic outlook, it expects global growth of 2023.2 percent in 7, which is expected to accelerate slightly to 2024.2 percent in 9. This means that it will still be well below the average of the ten years before the corona pandemic. There is still a long way to go to achieve strong and sustainable growth.

High inflation reduces income

According to the OECD forecast, the economy in Germany is expected to stagnate this year, with OECD experts not expecting growth of 2024.1 percent until 3. High inflation is eroding incomes and savings, dampening private consumption. The export business will provide decisive impetus for the economic recovery: supply chains are easing and the order backlog is high. According to the report, only Russia and Argentina perform worse than Germany. By comparison, the eurozone as a whole is expected to grow by 0.9 percent, the USA by 1.6 percent. The first- and second-placed countries India and China even grew by 6 percent and 5.4 percent respectively.

The Hamburg Institute of International Economics (HWWI) even expects economic output in Germany to decline by 0.5 percent this year. Only in the coming year, the economy could grow noticeably again with 1.25 percent, as the HWWI announced in an economic forecast. However, this does not require a further tightening of monetary policy or geopolitical uncertainties.

Investing in education and skills

Political leaders must act decisively to bring about stronger and more sustainable growth through economic and structural policies, the OECD warned. However, this will be difficult, because inflation is still too entrenched, debt too high and potential output too low. Investment in education and skills is crucial for people to thrive in tomorrow's economy and to reap the benefits of higher productivity.

Only recently, the OECD criticized Germany's climate course – and called for more speed: Germany must significantly increase its efforts in order to achieve the goals it has set itself. In order to actually become climate-neutral by 2045, for example, the pace of emission reduction must be tripled. Especially in the area of traffic, many opportunities remained untapped.

faq/dpa