Germany’s economy is expected to stagnate in 2024, despite a strong start to the year, according to the latest forecasts from the German economic institute IW. The manufacturing and construction sectors are still struggling, with consumption being the only bright spot as it picks up due to easing inflation. However, this alone is not enough for a real upswing, and investments need to increase to drive growth.

Germany’s economy shrank by 0.2% last year, the weakest performance among major euro zone economies. IW predicts 0% growth for Europe’s largest economy this year, falling behind countries like France, Italy, Britain, and the United States. Despite narrowly avoiding a recession at the start of the year, Germany’s economy is still facing challenges.

To improve conditions for businesses and drive growth, a policy boost is needed, according to IW economist Michael Groemling. Without changes, Germany risks squandering its potential and failing to capitalize on opportunities for growth. Foreign trade is also expected to remain weak, providing little economic stimulus this year. Overall, Germany’s economic outlook for 2024 remains uncertain, with challenges that need to be addressed to foster sustainable growth.

Investment is currently depressed due to the geopolitical situation and high interest rates, making financing more expensive. Last year’s weakest performance among major euro zone economies was Germany’s where its economy shrank by 0.2%. IW predicts that this year Germany will experience no growth at all while other countries such as France and Italy are projected to grow at a faster rate.

Despite avoiding a recession at the beginning of the year, Germany’s unemployment rate is expected