Germany's leading economic institutes have downgraded their forecast for 2024 and now see Europe's largest economy shrinking by 0.1%, they said in their autumn joint economic forecasts.
The forecast confirms the numbers Reuters reported exclusively earlier this week.
Germany's economy was the weakest among its large euro zone peers last year with a 0.3% contraction.
"In addition to the economic downturn, the German economy is also being weighed down by structural change," said Geraldine Dany-Knedlik, head of forecasting and economic policy at DIW Berlin.
"Decarbonisation, digitalisation, and demographic change -alongside stronger competition with companies from China – have triggered structural adjustment processes that are dampening the long-term growth prospects of the German economy," she added.
Inflation is expected to slow to 2.2% this year, from 5.9% last year, according to the forecasts. It will then hover around the 2% mark targeted by the European Central Bank over the next two years, the institutes said.
Even with inflation on a downward path, consumption remains weak as high energy costs, feeble global orders and high interest rates take their toll.
What has so far been a resilient labour market will start to feel the impact of the economic weakness. Unemployment is seen edging higher this year to 6.0% from 5.7% in 2023, a level not expected to be reached again until 2026, the forecasts showed.
The economic institutes now estimate German growth of 0.8% in 2025, down from a previous forecast of 1.4%, increasing in 2026 to 1.3%.
The economy ministry incorporates the combined estimates from the institutes - Ifo, DIW, IWH, IfW and RWI - into its own predictions.
The German government's latest forecast envisages economic growth this year of 0.3%. An update is due in October.
