The institutes now forecast gross domestic product (GDP) to increase by 1.4% in 2025, revised from 1.5% previously.
“Although a recovery is likely to set in from the spring, the overall momentum will not be too strong,” said Stefan Kooths, head of economic research at the Kiel Institute for the World Economy.
In the current year, private consumption will become the most important driving force for the economy, followed by stronger exports in the coming year, the institutes said.
Private consumption should benefit from lower inflation. German inflation is expected to ease to 2.3% in 2024 and 1.8% in 2025.
A robust labour market will also support consumption, the institutes said. Unemployment is likely to rise only slightly and fall again starting from spring onwards.
Over the course of the year, the unemployment rate is likely to be 5.8%, falling to 5.5% next year.
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