Germany's Ifo institute slightly raises 2024 GDP forecast

FILE PHOTO: The famous skyline with its banking district is pictured in early evening next to the Main River in Frankfurt, Germany, January 19, 2016. REUTERS/Kai Pfaffenbach/File Photo

BERLIN (Reuters) - Germany's Ifo institute slightly raised its 2024 forecast for economic growth in Europe's top economy on Thursday, citing stronger consumer purchasing power and recovery in global trade in goods and industrial production in the second half.

Ifo raised its growth forecast to 0.4%, from 0.2% in March, which roughly is in line with the German government's spring projection of 0.3% growth.

"New hope is now emerging," said Ifo economist Timo Wollmershaeuser. "The German economy is slowly working its way out of the crisis. The second half of 2024 should be significantly better than the first."

The German economy, which was the weakest performer among big euro zone countries last year, is expected to gain some momentum in its recovery over the course of this year, with inflation expected to fall and nominal wages forecast to rise.

"As the year progresses, the purchasing power of private households should continue to gain strength and the overall economic recovery should pick up speed as the consumer economy normalises," said Wollmershaeuser.

Global trade in goods and global industrial production should continue to recover, particularly from the second half, helped by a gradual upturn in investment as monetary policy in industrialized countries is set to ease, added Ifo.

Ifo maintained its forecast for economic growth of 1.5% in 2025, while inflation is expected to fall to 2.2% this year from 5.9% last year, and drop to 1.7% next year.

(Reporting by Rene Wagner and Miranda Murray; Editing by Madeline Chambers)