The German government aims for the economy to grow by 0.2% this year, far from the previous forecast of 1.3%, as weak global demand, geopolitical uncertainty, and persistently high inflation undermine hopes for a quick recovery.
The reforecast was approved by the cabinet on Wednesday as part of the government's annual economic report. Economy Minister Robert Habeck is scheduled to provide more details later.
Europe's largest economy is set to shrink by 0.3% in 2023 and is widely expected to slip into a technical recession in the first quarter of this year.
"The German economy continued to be in a difficult situation at the beginning of the year," a statement in the draft report observed.
The draft also lists high inflation and loss of purchasing power as challenges, as well as the geopolitical crisis and rising interest rates.
Germany's economic advisers plan to follow the federal government's move and cut economic growth forecasts in 2024, adviser Ulrike Malmendier said.
The gloomy forecast for Germany comes amid concerns about its status as an industrial location, as the government tries to reconcile tight fiscal rules with the need to attract investment and help finance the green transition.
The government is also expected to forecast a drop in inflation on Wednesday, from 5.9% in 2023 to 2.8% this year.
