Photo: Xinhua/Ren Pengfei
BERLIN, Jan. 24 (Xinhua) -- Economic research institute Ifo on Wednesday lowered its forecast for the German economy in 2024, expecting the country's gross domestic product (GDP) to grow by just 0.7 % instead of the 0.9 % predicted last month. The downward adjustment, according to Ifo, was based on austerity measures introduced by the Bundestag in its budget resolution last week. The German government had to cut spending as a result of the failed reallocation of funds for climate aid under the COVID-19 programme.
The cuts in government spending are expected to amount to about 19 billion euros ($20.7 billion) this year. "Businesses and households will bear a heavier burden or receive less relief and government spending will be reduced," Ifo said in a statement Timo Wollmershäuser.
In order to maintain the green transformation despite the savings, the government has targeted climate-damaging industries and sectors. Planned subsidy cuts in the agricultural sector have sparked weeks of protests by farmers across the country.
Even the government's concession to partially reverse the cuts was not enough to stop the protests. "Only when everything is actually negotiated to a conclusion will it be over," Joachim Rukwied, president of the German Farmers' Union, said on Sunday, announcing more protests in the future.
The austerity measures also directly affect German consumers, who are already burdened by persistently high inflation. The tax on airline tickets and the price of CO2 for fuel, natural gas and heating oil has been increased from EUR 30 to EUR 45.
The Federation of German Consumer Organisations (vzbv) wants to relieve consumers by making the revenue from the CO2, amounting to €11.4 billion since its introduction three years ago, will be returned to citizens in the form of a 'climate payment'. The government first talked about such an idea when it took office in 2021, but has not yet implemented it.
Price of CO2 while it created "an incentive for climate-friendly behaviour", it was also "an additional financial burden for people alongside high energy prices", said vbv board member Ramona Pop.
According to the first estimates of the Federal Statistical Office (Destatis), Germany will fall into recession in 2023 by 0.3 %. As inflation has been slow to normalise, economic activity has been dampened by private and public consumption and weak export demand.
Europe's largest economy did not continue to recover from the sharp economic downturn it experienced in the pandemic year 2020, Destatis President Ruth Brand said in a recap of last year's developments.
Xinhua/gnews.com/RoZ_07
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