Germany’s economy contracted for the second straight year in 2024, as revealed by data from the Federal Statistics Office.
The country’s GDP fell by 0.2% in 2024, following a 0.3% contraction in 2023, reflecting sustained economic challenges.
“Initial calculations from Destatis show that the price-adjusted GDP was 0.2% lower in 2024 than the year before,” a press release stated.
“Cyclical and structural pressures hindered economic progress in 2024,” said Ruth Brand at a press conference in Berlin.
She pointed to growing global competition for German exports, high energy costs, elevated interest rates, and economic uncertainty as contributing factors.
Manufacturing and Construction Hit Hard
Germany’s gross value added fell by 0.4% in 2024, with notable declines in manufacturing and construction sectors.
Manufacturing output dropped significantly, with gross value added declining by 3.0%, particularly in machinery, equipment, and automotive production.
Energy-intensive industries, including chemicals and metalworking, also struggled as production remained low due to persistent energy price challenges.
The construction sector experienced an even sharper decline, with gross value added down 3.8% in 2024.
High construction prices and interest rates resulted in fewer residential buildings being constructed. However, civil engineering projects like roads and railways saw growth.
By contrast, the service sector grew by 0.8% overall. While retail and transport services showed growth, motor vehicle trade, wholesaling, and food service activities declined.
Sectors linked to government functions, such as education and public health, reported a 1.6% rise in gross value added, showing steady growth.
Challenges Ahead Amid Pending Election
Germany faces mounting economic challenges as a snap election approaches, with the economy a central issue in political debates.
Stagnant growth, fiscal uncertainty, geopolitical tensions, high energy costs, and a weakened automotive sector weigh heavily on the nation’s outlook.
Without significant reforms to encourage investment and enhance competitiveness, Germany risks a prolonged period of economic stagnation.
