# German institutes cut 2024 GDP forecast on uncertainty
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-12-14
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: German Economic Institutes Cut 2024 GDP Forecast Amid
Meta Description: Leading German economic institutes cut 2024 growth outlook due to consumer and company uncertainty, hampered by government budget crisis.
URL: https://financedigest.com/german-institutes-cut-2024-gdp-forecast-on-uncertaintyhtml

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BERLIN (Reuters) – Three leading German economic institutes cut their 2024 economic growth forecasts on Thursday, saying consumer and company [uncertainty,](https://www.financedigest.com/institutional-investors-to-increase-commercial-real-estate-allocation-but-brexit-is-biggest-challenge.html) exacerbated by a weeks-long government [budget](https://www.financedigest.com/german-coalition-passes-2025-budget-after-months-of-wrangling.html) crisis, was delaying recovery.

The Ifo, RWI and DIW institutes all cut their [forecasts](https://www.financedigest.com/host-analytics-partners-with-prevedere-to-bring-predictive-financial-forecasting-to-epm.html) by between 0.3 and 0.6 percentage points from their previous expectations published in September.

Ifo now expects Europe’s largest economy to grow by 0.9% next year instead of 1.4%, while RWI cut its forecast to 0.8% from 1.1% and DIW dropped its prediction to 0.6% from 1.2%.

[“Uncertainty](https://www.financedigest.com/institutional-investors-to-increase-commercial-real-estate-allocation-but-brexit-is-biggest-challenge.html) is currently delaying the recovery, as it increases consumers’ propensity to save and reduces the willingness of companies and private households to invest,” said Ifo’s head of [forecasts](https://www.financedigest.com/host-analytics-partners-with-prevedere-to-bring-predictive-financial-forecasting-to-epm.html) Timo Wollmershaeuser.

For 2025, Ifo slightly raised its [forecast,](https://www.financedigest.com/host-analytics-partners-with-prevedere-to-bring-predictive-financial-forecasting-to-epm.html) saying the economy is on the road to recovery as purchasing power returns, demand is set to recover and high interest rates retreat.

DIW and RWI, on the other hand, revised down their 2025 outlooks.

[Uncertainty](https://www.financedigest.com/institutional-investors-to-increase-commercial-real-estate-allocation-but-brexit-is-biggest-challenge.html) around the government’s finances abated somewhat on Wednesday after Germany’s coalition parties reached a deal that reduces the 2024 [budget](https://www.financedigest.com/german-coalition-passes-2025-budget-after-months-of-wrangling.html) by cutting subsidies for activities which damage the climate, spending in some ministries and federal grants.

Ifo president Clemens Fuest praised the agreement as a step in the right direction but said questions remain unanswered, particularly about whether enough investment can still take place.

“The agreement on the 2024 [budget](https://www.financedigest.com/german-coalition-passes-2025-budget-after-months-of-wrangling.html) is a lazy compromise and a huge missed opportunity to make Germany fit for the future again,” said DIW president Marcel Fratzscher.

The DIW institute said budget cuts to the country’s climate and transformation fund, which is intended to assist companies with the costly transition to greener production, would dampen growth, by 0.3 percentage points in 2024 and 0.2 percentage points in 2025.

($1 = 0.9271 euros)

(Reporting by Miranda Murray and Maria Martinez, Editing by Rachel More, Kirsten Donovan, Alexandra Hudson)


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