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Cranes in the port of Qingdao: China's economy has recently experienced surprising growth

Photo: Uncredited / dpa

From the perspective of the International Monetary Fund (IMF), German economic output is likely to only increase minimally in 2024, and it lowered its forecast significantly. The IMF forecast growth of 0.5 percent for the current year. In October, the monetary fund's team of experts had expected an increase of 0.9 percent.

The forecast is the next dampener for the country's struggling economy. The Federal Statistical Office only published figures on economic growth in 2023 in the morning. Accordingly, German gross domestic product fell by 0.3 percent in the fourth quarter of 2023 compared to the previous quarter. Many economists also expect a weak start to 2024.

For the global economy as a whole, however, the IMF improved its forecast when updating its outlook - from 2.9 percent to 3.1 percent. However, the pace of growth remains low, wrote IMF chief economist Pierre-Olivier Gourinchas in a blog post. The IMF expects the global economy to grow by 3.2 percent in 2025. In order for goals such as sustainable growth and greater prosperity to be achieved, the pace must increase.

In China, for example, the economy recently made a surprising comeback. Growth accelerated at the end of the year - and reached an annual increase of 5.2 percent.

Germany will probably only be slightly positive in 2025

For the USA, the monetary fund raised its growth forecast from 1.5 percent in October to 2.1 percent. That would still be less than the estimated 2.5 percent last year. The US economy continues to be held back by high interest rates. The US Federal Reserve is keeping the key interest rate at a high level in order to curb inflation. If interest rates rise, private individuals and businesses have to spend more on loans - or borrow less money. This puts a strain on growth.

The IMF sees geopolitical tensions, particularly in the Middle East, as a risk. Gourinchas pointed out that the attacks by the militant Islamist Houthi militia on freighters in the Red Sea have already led to a significant increase in the price of freight deliveries between Asia and Europe.

For Germany, the IMF predicts economic growth will accelerate again to 1.6 percent in 2025. However, this is also 0.4 percentage points less than the October forecast. In the USA, the monetary fund expects the economy to slow down by 1.7 percent growth.

The IMF believes it is possible that software based on artificial intelligence can bring higher productivity and income in the medium term. At the same time, experts assume that this will be felt more quickly in developed economies.

At the beginning of January, the World Bank predicted that the global economy would grow by 2.4 percent this year.

apr/dpa