ECB’s Nagel: See Annual Productive Potential of German Economy at 0.4%

17 January 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Friday said that the Bundesbank now saw potential growth in Germany at less than a third of what it was just a few years ago.

In a speech at the Frankfurt regional offices of the German Bundesbank, which he heads, Nagel said that ‘[t]here is no doubt that the German economy is experiencing a pronounced growth weakness.’

Subdued economic prospects were to an important degree of a structural nature, he said. The Bundesbank was thus now estimating Germany’s annual productive potential at 0.4%, versus an average of 1.4% between 2011 and 2019, he said.

‘In order for companies to invest and expand, the economic conditions must be right’, he said. ‘And confidence in the future is necessary.’

‘Good economic policy can promote this confidence with reliable, plannable actions and thus improve the economic conditions’, he continued. ‘The next federal government has the power to implement structural reforms that will increase potential growth again. So that fears of decline evaporate again.’