German economy continues to grow slowly (Illustration photo: AFP).
According to a newly published report by the Center for Economics and Business Research (CEBR), the German economy is expected to continue to slow down in the coming years. It is expected that by 2027, this country will lose its position as the world's fourth largest economy to India.
According to the study, one of the reasons why Germany's economy is considered weak is because its manufacturing sector depends on Russian energy.
"Supply problems have severely affected Germany's manufacturing sector in recent years, especially in the context of a sharp increase in global energy prices in 2022. Germany's dependence on energy supplies from Russia has exacerbated this problem," the CEBR report pointed out.
The energy price shock has also helped boost inflation in the EU’s largest economy, with price growth forecast at 6.3% in 2023, down from 8.7% in 2022 but still above the recent average, the report said.
"High inflation is one of the reasons that reduces spending power and limits consumption activities. This has a certain impact on consumer services," CEBR wrote.
Germany's gross domestic product (GDP) could shrink by 0.4% in 2023, its weakest growth since 2009, excluding the pandemic year of 2020. Supply, limited spending power and tight interest rates are among the reasons for this. The CEBR forecasts that the German economy will grow again in 2024 at a rate of 0.7%.
In addition, the CEBR report predicts that global GDP will more than double to $219 trillion by 2038, thanks to “the expansion of formerly underdeveloped economies as they catch up and overtake traditionally wealthy countries.” Vietnam, Bangladesh and the Philippines are among the fastest-growing economies.
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