The German economy will shrink by 0.2 percent in 2024, the Federal Statistical Office reported on Wednesday. This is the second year in a row that the GDP of our western neighbor has been declining.
Preliminary data from the Federal Statistical Office in Wiesbaden (DEStatis) show that in 2024 GDP German decreased by 0.2 percentcounting year to year. This is only slightly better than a year earlier, when the German economy, also on an annual basis, shrank by 0.3%.
Germany weakened by growing competition
The office's president, Ruth Brand, emphasized that the main brakes on the faster development of Europe's largest economy were “economic and structural burdens”. – This is growing competition for German exports on important markets, high energy costs, and a persistently high level interest ratesbut also uncertain economic prospects – explained the head of DEStatis.
The main reasons for Germany's negative GDP reading in 2024 were the performance of the industrial sector, which recorded a 3% decline year-on-year, including significant decline in the automotive industry. Production rates in energy-intensive industries: chemical and metallurgical were still relatively low. The results of the construction industry, which is struggling with weaker demand, among others, were also lower than expected. due to high material costs. By 0.8 percent Moreover, the export of goods and services shrank.
German media emphasized that in 2024 there was no expected increase in household consumption, which remains the best hope for economic recovery, and at the same time, federal budget expenditure increased significantly.
The dpa agency emphasizes that concerns about maintaining employment and price increases include, among others, energy increases the pressure to save. On the other hand, it was emphasized that in 2024 there was an increase in real wages, a inflation in Germany it dropped to an average level of 2.2%, year-on-year compared to 5.9%. in 2023
Poor mood in the economy
The mood in the German economy at the turn of the year was worse than during the coronavirus crisis, according to a December survey by the economic research institute Ifo, in which approximately 9,000 managers participated. “The weakness of the German economy has become chronic,” Ifo president Clemens Fuest commented on the study results, quoted by Die Welt.
The dpa agency emphasized that the mood for 2025 is dominated by restraint and uncertainty, caused by, among others, early parliamentary elections to be held on February 23. The new president's economic policy also raises many concerns USA Donald Trump. Economists also point out that last year was another year that Germany closed with budget deficit – its amount is initially estimated at EUR 113 billion, or 2.6 percent year-on-year.
The Bundesbank lowered its forecast for the German economy for 2025 and expects annual GDP growth of 0.2 percent.
Main photo source: Shutterstock