Economy: Federal government expects slight growth at the end of the year

Special effects such as the low level of the Rhine are disappearing, which is why the Ministry of Economic Affairs expects more growth at the end of the year. But high oil prices remain a burden.

Berlin. According to the federal government, the economy in Germany is likely to gain momentum again. Recent pressures such as low water on the Rhine and production breaks by car manufacturers are likely to ease, “so that economic momentum is likely to accelerate somewhat towards the end of the year,” the Ministry of Economic Affairs explained in its monthly report on Friday.

“The economic recovery is increasingly affecting small and medium-sized companies, which are more dependent on domestic demand than large corporations.” When it comes to consumption, however, the picture remains subdued, as retail sales and consumer sentiment are subdued. “The fuel discount should support purchasing power, but high and volatile oil and gas prices pose a risk.”

The German economy grew by 0.2 percent in the summer quarter compared to spring, after plus 0.3 percent in the second quarter and 0.4 percent at the start of the year. After a long economic downturn, it is gradually gaining momentum and is expected to grow noticeably again this year for the first time since 2022.

Economists expect over one percent, the federal government expects an increase of 1.3 percent. The main stimulus is increased government spending on infrastructure and defense. However, many experts do not yet see this as a self-sustaining upswing because private investments are still hesitant due to the ongoing uncertainty.

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