German GDP -0.3% in 2023. Industry badly, post-pandemic restoration stops | EUROtoday

Listen to the audio model of the article

Germany’s GDP fell by 0.3 p.c in 2023, barely higher than expectations for a 0.4 p.c decline. This is the preliminary knowledge revealed this morning by the federal statistics workplace Destatis.
Net of calendar results, the German economic system contracted by 0.1%, consistent with expectations. The sector that recorded the worst efficiency was business (-2%), building additionally carried out poorly, whereas companies held up effectively.

The causes for the contraction

The president of Destatis Ruth Brand commented on the decline in GDP as follows: «In 2023 in Germany total financial growth has faltered in a context that continues to be characterised by a number of crises». «Despite the current decline, costs (ed, inflation) have remained excessive in any respect levels of the financial course of and have slowed financial development. Unfavorable financing situations attributable to rising rates of interest and weakening home and international demand additionally had their affect. Therefore, the German economic system didn’t proceed its restoration from the robust financial disaster skilled within the pandemic 12 months 2020,” Brand underlined.

The sectors most in problem

In 2023, the event of gross worth added was very heterogeneous throughout completely different sectors of financial exercise. Overall, the financial efficiency of business (excluding building) declined considerably, with a contraction of two.0% primarily attributable to a lot decrease manufacturing within the vitality provide sector. The manufacturing sector, which represents nearly 85% of business (excluding building), was additionally in destructive territory in 2023 (-0.4%), after correcting for value results.

Production and worth added declined in energy-intensive industrial sectors, such because the chemical and metallic industries, after the financial efficiency of those sectors had already reacted very strongly to rising vitality costs in 2022.

For economists at Commerzbank, the truth that the economic system in Germany has struggled to get well after the Covid-19 pandemic is especially worrying. The contraction in GDP, recorded within the fourth quarter of 2023, ought to subsequently proceed within the first quarter of this 12 months.