As per a report from the Centre for Economics and Business Research (CEBR), it is anticipated that Germany will lose its position as the fourth-largest economy in nominal USD terms, giving way to India by 2027.
The research suggests that Germany’s decline to the fifth spot among the world’s largest economies is linked to its significant dependence on Russian energy to fuel domestic production.
The report highlights that facing the shock of energy prices has contributed to inflation in the European Union’s (EU) largest economy. The projected price increase is 6.3% in 2023, a decrease from the 8.7% recorded in 2022 but still higher than recent-year averages. CEBR notes, ”High inflation has played a role in reducing spending power and, consequently, limiting consumer activity. This has notably impacted consumer-oriented services”.
Germany is expected to experience a 0.4% reduction in its Gross Domestic Product (GDP) in 2023.
According to CEBR, excluding the downturn caused by the COVID-19 pandemic in 2020, this represents the weakest growth performance for Germany since 2009. The decline is attributed to challenges in the supply chain and diminished consumer spending. Another contributing factor is the tightening of interest rates. CEBR predicts a resumption of economic growth in Germany in 2024 with a rate of 0.7%, followed by further acceleration in 2025.
Furthermore, the report suggests that global GDP will more than double, reaching $219 trillion by 2038. This growth is attributed to the continuous expansion in previously underdeveloped economies as they catch up and surpass traditionally wealthy nations. Among these, Vietnam, Bangladesh, and the Philippines are identified as the fastest-growing economies.
By. Pham Thanh Bien
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