Germany's BDI industry association said on Tuesday that it expects the German economy to grow 0.3% in 2024 while forecasting that the global economy will expand by 2.9%.
"The economy is at a standstill in Germany. Compared to most other major industrialised countries, our country is falling further behind," said BDI president Siegfried Russwurm. "We don't see any chance of a rapid recovery in 2024."
The German economy contracted by 0.3% in 2023, due to persistent inflation, high energy prices and weak foreign demand, the federal statistics office said on Monday.
Russwurm said the challenges facing the economy last year have not faded, making 2024 another difficult year. The modest growth expected is set to come from a recovery in consumption as inflation eases.
"The central banks' interest rate policy could become a ray of hope over the course of the year," Russwurm said, noting the decline in inflation raises the prospect of gradual interest rate cuts.
However, he said lower rates would not have a noticeable effect on the real economy until spring 2025.
The BDI predicts that German industry is unlikely to bounce back and production in energy-intensive sectors, in particular, is likely to remain weak due to high electricity prices.
Russwurm said 2024 would have many elections of high importance and Europe must be ready for all scenarios. He expressed his concerns about another presidency of Donald Trump with his "America first" approach.
"Europe must prepare for a world in which we, Europeans, are more on our own and can rely less on the transatlantic security partnership of the past 75 years," Russwurm said.
The BDI is the latest institution to present a disappointing growth forecast for the euro zone's largest economy after the government suffered a huge blow in November when Germany's top court threw out its 2024 budget plans.
Three leading German economic institutes cut their 2024 economic growth forecasts in December.
Ifo now expects Germany 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%.
Russwurm urged Germany's coalition parties to find agreement and move forward, saying paralysis would be the worst of all scenarios.
