German economy likely to shrink in Q1

BERLIN

The German Institute for Economic Research (DIW) forecasts that the country's economy will continue to shrink in the first quarter of this year.

After GDP shrank by 0.3% in the fourth quarter of 2023, hopes for a small increase in GDP in the first quarter of 2024 are fading, the institute stated on Wednesday.

DIW economist Timm Bonke pointed out that the German economy is struggling to find a way out of the economic recession.

Germany's economy continues to struggle with the consequences of the Russian-Ukrainian war, high interest rates, uncertain economic policy conditions, and moderate growth in the global economy, he added.

The rise of populist and extremist parties is not helping companies in this country look to the future with more confidence, he believed.

The German economy, which shrank by 0.3% in the last quarter of 2023 compared to the previous quarter due to the effect of high inflation reducing the purchasing power of households, will technically enter a recession if it shrinks in the first quarter of 2024.

In Germany, the government revised its GDP growth expectation from 1.3% to 0.2% citing weak global demand, geopolitical uncertainty, and unusually high inflation.

*Writing by Gokhan Ergocun from Istanbul