According to Bloomberg, Economy Minister Robert Habeck has issued a warning, stating that the German government will lower its previous estimate of 1.3% economic growth in 2024 to 0.2%.

Next Wednesday, Habeck is anticipated to provide the most recent economic report and revised projections from the government. The minister allegedly mentioned a decision made late last year by the Federal Constitutional Court that forbade the government from repurposing remaining Covid-stimulus funds because it upset the government’s budgetary planning as one of the major reasons affecting the economy.

Habeck was cited as saying, “This of course has an immediate growth-crimping effect,” at a Leipzig meeting on Wednesday. He stated that as a result of the ruling, the government was forced to reduce the amount of relief from high energy prices provided to businesses and consumers. “The reality is that such measures would of course help support the economy,” the minister stated.

The economy of Germany was the only one among the G7 to decrease last year as a result of the energy crisis. The economy contracted by 0.3% in 2023, according to official data, as a result of rising interest rates, skyrocketing inflation, and overall weakening in the world economy. The two biggest lenders in the nation, among other economists, Commerzbank and Deutsche Bank, are forecasting another contraction in 2024.

The German economy’s 2024 projections from the economic institutes Ifo and IfW have both been decreased. While the IfW lowered its prediction to 0.9% from 1.3%, Ifo is now predicting growth of 0.7% from its prior estimate of 0.9%.

The competitiveness of the EU’s largest economy needs to be strengthened, according to comments made this week by German Finance Minister Christian Lindner.