Home Economy German economy shrinks in the last quarter of 2023

German economy shrinks in the last quarter of 2023

0
German economy shrinks in the last quarter of 2023
BusinessGermany

German economy shrinks in the last quarter of 2023

January 30, 2024

Europe’s largest economy continued to shrink due to crises, inflation and lack of investment. Economists have warned that the outlook for 2024 doesn’t look much better.

https://p.dw.com/p/4bp5R
A container ship passes through the terminals of the port of Hamburg in northern Germany
The reduction in demand for German exports, especially in China, had its effects on the national economyImage: Christian alliance Charisius/dpa/image

Germany’s gross domestic product (GDP) fell by 0.3% in the last quarter of 2023, the Federal Statistical Office (Destatis) reported on Tuesday, confirming its previous estimates.

Facing high inflation, high interest rates, low demand for German exports and a series of strikes, Europe’s largest economy also saw its GDP fall by 0.3% throughout 2023, according to preliminary data. from the government.

Germany is also expected to face a difficult 2024, with economists predicting a further contraction in the first quarter of this year.

“The German economy has not grown for almost two years and there is no recovery in sight,” Sebastian Dullien of the IMK Institute told Reuters.

“The weak fourth quarter of 2024 points to a weak start to the new year – the best case scenario for the first quarter is minimal growth. There is even a risk that the German economy will shrink further,” she added.

Sick man from Europe?

Once considered the economic giant of the eurozone, Germany has more recently been derided as the “sick man of Europe”.

However, it was not the only country to perform poorly, with France seeing its economy stagnate. At the same time, Italy — the EU’s third-largest economy — saw its GDP grow by 0.7%, while Spain — the EU’s fourth-largest economy — saw an impressive growth of 2.5%.

All these numbers were released on Tuesday.

German Finance Minister Christian Lindner tried to paint a more positive picture, saying at the World Economic Forum in Davos in early January that “Germany is not the sick man” but rather “a tired man” after the last years of crisis, which was in need of a “good cup of coffee” — that is, structural reforms.

Lindner’s pro-market Free Democrats (FDP) – the most junior partner in the ruling coalition government – have refused to budge on maintaining Germany’s “debt brake”.

A uniquely German financial policy, the “debt brake” prevents the government from borrowing more money in an attempt to keep its books in balance. This policy has been criticized by many economists, especially outside Germany, who have highlighted that the loan is necessary to invest in the country’s future, as with green restructuring.

ab/mf (dpa, Reuters)

While you’re here: Every Tuesday, DW editors summarize what’s happening in German politics and society. You can sign up here to receive the weekly Berlin Briefing email newsletter.

Source: DW

LEAVE A REPLY

Please enter your comment!
Please enter your name here