The German economy contracted by 0.2% in 2024, marking the second consecutive year of decline, according to the Statistisches Bundesamt, Germany’s statistical office. The last quarter of the previous year also saw a contraction of 0.1%.
This downturn is attributed to increased competition in key export markets, high energy costs, persistent high interest rates, and uncertain economic prospects. After growth in 2021 and 2022, a decline of 0.3% occurred in 2023, affecting primarily small and medium-sized enterprises and the automotive industry, both crucial to Germany’s economy.
While the rest of the EU experiences economic growth, Germany faces rising unemployment, more bankruptcies, and a significant drop in exports. The outlook for this year remains bleak, with minimal growth or further contraction anticipated.
If the economy shrinks again, it will be the first time in post-war Germany that a recession spans three consecutive years. Major job cuts are expected, with companies like Volkswagen, which announced plans to eliminate over 35,000 jobs without closing factories, and Mercedes-Benz facing similar challenges.
In just over five weeks, Germany will hold elections for a new Bundestag and government, with the economy being a primary concern for many voters.
Source: NOS