EXCLUSIVE-German government slightly raises 2024 GDP forecast to 0.3%, source says

For 2025, the government sees inflation falling to 1.8%. Economic experts from around the world expect inflation rates to decline in the years ahead, according to a quarterly survey published by the Ifo Institute on Friday.

The German government will raise its economic growth forecast for this year to 0.3%, from a previous forecast of 0.2%, while it will lower its forecast for inflation by 0.4 percentage points, a source told Reuters on Friday. In 2025, the government expects gross domestic product to grow by 1.0%, according to the source.

Inflation is expected to fall faster than previously expected, going down to 2.4% this year. The government had forecast 2024 inflation at 2.8% in previous projections. For 2025, the government sees inflation falling to 1.8%.

Economic experts from around the world expect inflation rates to decline in the years ahead, according to a quarterly survey published by the Ifo Institute on Friday. In the case of Germany, inflation is seen falling to 3.1% this year, according to the survey.

"Compared to the previous quarter, inflation expectations for this year have fallen further," said Ifo researcher Niklas Potrafke. But in the medium term, the experts expect inflation rates around the world to remain quite high and above central banks' inflation targets, Potrafke said.

The forecasts are part of the draft spring projections of the government, which Economy Minister Robert Habeck is due to present next Wednesday. The economy ministry declined to comment.

The German economy, Europe's biggest, was the weakest among its large euro zone peers last year, as high energy costs, feeble global orders and record-high interest rates took their toll. Although inflation and energy prices are expected to ease this year, growth is forecast to remain weak.

This week, the International Monetary Fund cut its forecasts for German GDP by 0.3% for both 2024 and 2025, expecting 0.2% growth this year and 1.3% next year.

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