Germany's economy contracted in the fourth quarter of 2024, ending the year on a negative note. Exports declined significantly, despite increases in household and government spending. This contraction has led to a downward revision in Germany's growth forecast for 2024.
Germany's economy contracted in the fourth quarter of 2024, following a slight increase in the preceding three months. While household and government consumption expenditures rose, exports experienced a significant decline compared to the previous quarter, according to Destatis, Germany's statistics agency. Destatis reported on Thursday that Germany's GDP shrank by 0.2% quarter-on-quarter in the three months ending in December. This figure surpassed the 0.
1% decline predicted by analysts surveyed by Reuters. The German economy concluded 2024 in negative territory after a year characterized by economic and structural challenges, Destatis stated. Carsten Brzeski, global head of macro at ING, expressed that there is a high probability this downturn will lead to a winter recession. He noted that Germany's current economic issues appear to be concentrated within its industrial sector. However, he cautioned that these problems could spread to other sectors, either through sentiment or real economic channels. Brzeski emphasized that the vital industrial sector is unlikely to experience a substantial recovery as challenges with inventories and order books persist, and tariffs on exports to the United States remain a looming concern. Thursday's figures contrast with the 0.1% growth recorded in Germany's GDP during the third quarter of the previous year. Germany's economic performance has been sluggish for an extended period, with quarterly GDP readings mostly fluctuating around the flatline in the past two years. Nevertheless, the economy has managed to avoid a technical recession. The German government released its economic forecast, predicting a 0.3% growth for 2024. This revision represents a significant downward adjustment from its previous estimate of 1.1% growth. Robert Habeck, Germany's economy and climate minister, characterized the situation as 'serious' during a press conference on Wednesday, according to a CNBC translation. He pointed to both internal and global political uncertainties as contributing factors to the reduced growth expectations. Habeck also stated that the outgoing government had been unable to fully implement its growth plans due to its early termination. Germany is scheduled to hold a federal election on February 23, earlier than originally planned due to the dissolution of the country's ruling coalition late last year. Germany's economy minister, Wolfgang Kückies, stressed the urgency of addressing the structural weaknesses of the German economy. He emphasized the importance of embarking on a path of economic growth.
GERMANY ECONOMY GDP CONTRACTION GROWTH OUTLOOK RECESSION INDUSTRY
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