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Germany's economy shrank for a second year in a row in 2024, official figures showed Wednesday. Europe's largest economy saw a 0.2 percent contraction in Gross Domestic Product (GDP) after a 0.3 percent fall in 2023, and is currently grappling with a political crisis, dimming hopes for a fast recovery.
Germany has faced a perfect storm, with high energy costs battering its manufacturing sector, demand weak in China and other key export markets, and the economy facing deep-rooted structural problems including a shortage of skilled labour.
Destatis president Ruth Brand said the economy suffered under both "cyclical and structural pressures" last year.
"These include increasing competition for the German export industry on key sales markets, high energy costs, an interest rate level that remains high, and an uncertain economic outlook," she said. Preliminary data also showed that the economy had contracted 0.1 percent in the final quarter of last year compared to the previous quarter.
Fears are growing that the economy will struggle to get back on its feet this year, due in part to the political crisis at home. Following the collapse of Chancellor Olaf Scholz's coalition, Germany is heading for early polls on February 23, which is expected to be followed by a period of paralysis before a new coalition emerges.
The data released Wednesday -- in line with most forecasts, including from the government -- will be further bad news for Scholz, who has been criticised for failing to reboot the economy and already faces an uphill battle to win re-election. US President-elect Donald Trump's threat to hit imports into the world's top economy with tariffs is adding to jitters for German exporters.
The last time Germany recorded two straight years in the red was 2002-2003, when the country was still seen as the "sick man" of Europe. Relative success in the years that followed earned it a reputation as the powerhouse of the eurozone but Germany's economic motor has stalled since the coronavirus pandemic and outbreak of the Ukraine war.
Germany finds itself in the unusual position of having to bring up the rear in Europe in terms of growth -- the European Commission has predicted the overall eurozone economy to have grown by 0.8 percent in 2024, well above Germany's result.
