Investing.com -- Germany’s economy, the largest in Europe, has contracted for the second consecutive year in 2024, marking it as the weakest among its eurozone counterparts. The Federal Statistics Office reported on Wednesday that the economy shrank by 0.1% in the last quarter of 2024, and recorded a 0.2% contraction for the whole year.
The 2024 full-year decrease in the Gross Domestic Product (GDP) aligns with the predictions made by analysts who expected a 0.2% drop in the same year. As a major export-oriented economy, Germany has been negatively impacted by weak global demand and increased competition from Chinese products. The country’s exports decreased by 0.8% in 2024, in comparison to the previous year.
The economy ministry, in its monthly report published on Wednesday, indicated that if the first quarter of 2025 also shows negative growth, the German economy could be facing a winter recession. A technical recession is characterized by two successive quarters of economic contraction.
The ministry further stated that a significant economic recovery for Germany could only be expected after achieving clarity on the economic, financial, and geopolitical outlook. It cautioned that global production of industrial products is modest and the outlook for German trade is not promising.
The report also mentioned that as 2025 progresses, factors that can dampen inflation, such as the moderate price trend at upstream economic levels, the after-effects of restrictive monetary policy, and lower wage settlements, are likely to become more predominant.
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