Sunday, August 24, 2025
spot_img
More
    HomeLifeStyleGermany's economic model under scrutiny as growth stalls: Fitch

    Germany’s economic model under scrutiny as growth stalls: Fitch


    Fitch Ratings has raised concerns over the performance of the German economy, suggesting that the country’s economic model may be “broken” as GDP growth remains stagnant. Despite a decade of robust growth from 2010 to 2019, Germany’s post-COVID-19 recovery has been lacklustre, with output in the fourth quarter of 2023 barely surpassing levels seen in 2019, marking the worst performance among 20 major economies tracked by Fitch Economics.

    Several factors have contributed to Germany’s underperformance, including the lingering effects of negative shocks such as the 2022 gas supply and price shock, ECB monetary tightening, and a global downturn in trade volumes coupled with weaknesses in the Chinese economy. However, there is room for improvement, with the expectation of a gradual catch-up as these shocks dissipate, Fitch Ratings said in its report titled ‘Germany: Medium-Term Recovery from Lull’.

    Fitch Ratings has flagged concerns over Germany’s stagnant GDP growth, citing post-pandemic weakness and structural constraints.
    Dependency on foreign demand and slow domestic investment hinder recovery, despite potential for catch-up as negative shocks fade.
    In its latest report on the country, Fitch predicts gradual growth improvement from 2024 to 2027.

    By the end of 2024, Germany is projected to have the widest negative output gap among developed economies, estimated at around 2 percentage points. While structural constraints, including a slow-growing labour force and dependence on foreign demand, pose challenges, Fitch Ratings predicts a potential recovery in growth from 2024 to 2027, albeit starting slowly.

    Addressing these vulnerabilities, Fitch Ratings suggests that greater domestic investment could help reduce reliance on global demand and bolster productivity, potentially steering Germany’s economy towards a more sustainable path of growth.

    Fibre2Fashion News Desk (KD)






    Source link

    RELATED ARTICLES

    Most Popular

    Recent Comments