BERLIN: The German economy is expected to recover more slowly next year than previously forecast as the need for spending on greener infrastructure mounts, the Organisation for Economic Cooperation and Development (OECD) said on Monday.
Gross domestic product in Europe’s largest economy will increase by 0.3% in 2023 and 1.3% the following year, according to projections released in the OECD’s latest economic survey of the country.
In March, the OECD had predicted GDP growth in 2024 of 1.7%. The forecast for this year was unchanged.
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The report called on Berlin to speed up its transition towards a more digital and climate-friendly economy, for example by showing more flexibility on its debt rules to allow for necessary investments.
However, it also warned against expansive fiscal policy in order to shield German competitiveness.
“After 10 years of dynamic export-induced growth, falling unemployment and budget surpluses, the pandemic and the energy crisis showed that Germany has structural weaknesses and urgently needs to accelerate its ecological and digital transformation,” the report said.
In a separate assessment of Germany’s progress on climate goals, the OECD recommended that Berlin work to expand its power network and renewable energies infrastructure.
It also called on Germany to modernise its transport network and said speed limits posed an untapped opportunity to bring down carbon emissions.
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