The Organization for Economic Co-operation and Development (OECD) on Monday revised its growth forecast for the German economy downwards for this year, and now predicts growth of 0.3%.
The OECD also slightly lowered its growth forecast for the eurozone as a whole to 0.6% for 2024, citing tight credit conditions.
For 2025, the OECD now forecasts gross domestic product (GDP) growth of 1.1% in Germany and 1.3% in the eurozone.
The OECD had previously forecast in November economic growth in Germany of 0.6%.
The OECD expected global economic growth to weaken overall compared to 2023, forecasting global growth of 2.9%, down 0.2 percentage points from November.
High interest rates and tight financial conditions are having an impact on the property and credit markets, according to the OECD, while global trade remains subdued.
The group also noted that attacks by Iranian-backed Houthi militants in Yemen on ships in the Red Sea have caused freight costs to rise sharply, shipping times to increase and disrupted production schedules.
Overall, the organization sees the strong geopolitical tensions as a significant short-term risk to economic growth and a potential driver of inflation, especially if conflicts in the Middle East were to disrupt energy supplies.
The OECD said governments are coming under increasing financial pressure due to rising public debts and expenditures.
It said greater international cooperation is needed to revive global trade, make faster and better progress with decarbonization and alleviate debt burdens in lower-income countries.
The Paris-based OECD is a global organization of countries committed to democracy and a market economy. In addition to major economies like Germany, the United States and Japan, the group also includes emerging economies such as Mexico and Chile.