Germany Business shrank again last year. The gross domestic product (GDP) fell by 0.2 percent compared to the previous year, as the Federal Statistical Office announced on Wednesday. “Economic and structural burdens stood in the way of better economic development in 2024,” explained head of the authority Ruth Brand (57). In 2023, GDP had already shrunk by 0.3 percent.
According to an initial estimate by statisticians, in the fourth quarter of 2024, Europe’s largest economy will probably have shrunk by 0.1 percent compared to the previous quarter, adjusted for prices, seasons and calendar. A significant upswing is not in sight.
The burdens on the German economy last year included “increasing competition for the German export industry in important sales markets, high energy costs, and continued to increase interest rate level“, but also uncertain economic prospects,” explained Brand.
In industry, GDP shrank by 3.0 percent. Especially important areas such as mechanical engineering or Automotive industry produced significantly less, explained the statistics office. In energy-intensive industries such as the chemical and metal industries, production remained at a low level.
In the construction industry, value added even fell by 3.8 percent. The main reason was that fewer residential buildings were built due to the still high construction prices and interest rates. The service sector, on the other hand, developed positively overall, with GDP increasing by 0.8 percent.
According to statistics, investments fell by 2.8 percent last year compared to the previous year. “Private consumer spending only rose by 0.3 percent. “The weakening inflation and wage increases for many employees were only able to stimulate purchases to a limited extent,” explained the statisticians. The state’s consumer spending, on the other hand, grew by 2.6 percent.
Exports weakened noticeably, exports of goods “made in Germany” fell by 0.8 percent. Imports rose slightly by 0.2 percent.