BERLIN, June 20 (Xinhua) -- Germany's economy is expected to grow by 0.4 percent in 2024, from the previously predicted 0.2 percent, according to the ifo Institute for Economic Research on Thursday.
Europe's largest economy was "slowly working its way out of the crisis," said Timo Wollmershaeuser, deputy director of the ifo Center for Macroeconomics and Surveys, in a statement.
Although companies' assessment of the current economic situation remains poor, expectations for the coming months have increased in all sectors, according to ifo. Additionally, energy costs for industry have continued their downward trend and are now at 2020 levels.
In May, producer prices for energy in Germany fell by 6.4 percent year-on-year, according to official figures by the Federal Statistical Office (Destatis). This development was driven by price declines of over 10 percent for natural gas and electricity.
The lower energy costs are making production in Germany more profitable again, allowing companies to work off high order backlogs, ifo reported. At the same time, energy-intensive industries can expand output again.
With a predicted 1.5 percent growth in global trade, ifo expects Germany's export industry to bolster the country's economy this year, while export and investment demand in Europe are not likely to pick up before the end of the year.
Germany's weakening construction industry, on the other hand, is likely to continue its downward trend "and suffer a strong setback," the institute noted.
Germany's housing crisis persists, with building permits for apartments declining steadily in recent years. In April, only 17,600 apartments were granted permits, down 17 percent year-on-year, according to official figures.
Despite Germany hosting the ongoing UEFA EURO 2024 football championship, ifo does not forecast a rise in private consumption. While sales in the hospitality and food retail sectors should pick up briefly during the event, "domestic consumers will probably reduce their spending elsewhere," the institute reported.
The easing of price pressure, however, is expected to increase purchasing power. After 5.9 percent in the previous year, inflation is forecast to fall to 2.2 percent in 2024 before undershooting the European 2 percent target next year, according to ifo. ■
