Germany in recession: GDP fell by 0.2% in 2024 | EUROtoday

Listen to the audio model of the article

Second consecutive contraction for Germany: as anticipated, the GDP of the Eurozone’s largest financial system fell by 0.2% in 2024, after a decline of 0.3% in 2023, based on preliminary knowledge from the Institute for National Statistics, Destatis. It is simply the second time since 1950 (after 2002-2003) that the German financial system has suffered a downturn for 2 years in a row. In the fourth quarter of 2024, GDP fell by 0.1% in comparison with the earlier three months.

Modest rebound in 2025

The restoration anticipated for 2025 is predicted to be marginal. The Bundesbank expects progress of simply 0.2% and warns that one other contraction is feasible if US President-elect Donald Trump follows by way of on his tariff threats.

The Ifo Institute forecasts progress of 0.4%. «Germany goes by way of by far the longest section of stagnation in post-war historical past. Furthermore, it’s falling considerably behind in worldwide comparisons,” says Timo Wollmershäuser, head of forecasts on the institute. Without countermeasures, manufacturing corporations will proceed to relocate manufacturing and investments overseas, warn Ifo researchers.

In 2024, GDP, adjusted for costs, was solely barely increased than in 2019, earlier than the outbreak of the Covid-19 pandemic. In worldwide comparability, Germany is especially affected by digitalisation, decarbonisation, demography and deglobalisation, which have been considerably accelerated by the crises of current years. «Compared to different international locations on the planet, the burden of taxes, paperwork and power prices on corporations is excessive, the renewal of digital, power and transport infrastructure proceeds extra slowly and the scarcity of expert employees is extra pronounced», explains Wollmershäuser .

There is heavy competitors from China, which has gained floor within the manufacturing of necessary applied sciences, particularly within the automotive and mechanical sectors, and has reworked itself right into a severe competitor. As a consequence, the economist factors out, German corporations are shedding world market share for merchandise through which they’d been leaders for many years.