Bankinter : The German government has improved its growth estimates for 2024. It revises upwards by one tenth of a percentage point to +0.3% YoY (vs +0.2% prev.) the GDP growth expected this year. Maintains the estimate of +1.0% for 2025.
Analysis: Positive news. The German government expects both consumption and industrial activity to perform better than estimated this year. The good evolution of inflation (+2.2% in March), the likely start of interest rate cuts in June, rising wages, the strength of the labour market and wholesale gas and electricity prices at pre-war levels in Ukraine improve both confidence and the outlook for the German economy. In this sense, Finance Minister Habeck comments that “there are more and more signs of a gradual recovery and a rise in purchasing power”, which seems to put fears of an extended recession behind us. It should be recalled that in 2023 German economic activity declined -0.3% year-on-year. The latest macro references (IFO, ZEW and PMIs) generally point to this improvement in Germany’s economic outlook, but Habeck also warns of the loss of competitiveness.
