Germany's Economic Struggle: Structural Crisis Threatens Growth and Stability

The German economy is expected to contract by 0.2% this year, according to the German Chamber of Commerce and Industry (DIHK). DIHK highlights a structural crisis leading to stagnant growth projections through 2025. A survey of 25,000 companies reveals declining business expectations and investment reductions, with significant concern over deindustrialization.

The German economy is projected to shrink by 0.2% in 2023, as disclosed by the German Chamber of Commerce and Industry (DIHK) on Tuesday, revising its earlier forecast of economic stagnation. Furthermore, the economic landscape shows no signs of improvement for 2025, marking the third consecutive year without real GDP growth.

DIHK's managing director Martin Wansleben emphasized the gravity of a structural crisis plaguing Germany during the autumn 2024 economic survey presentation. Business sentiments are pessimistic, with 31% of surveyed companies anticipating a downturn, and a minimal 13% hoping for positive change. Wansleben expressed concern over Germany's diminishing economic role in Europe.

The survey, involving 25,000 firms across various sectors, revealed a stark decline in business conditions, especially in industry where 35% of companies reported adverse situations. Calls for significant reforms are intensifying, as a noteworthy portion of companies plan to withdraw investments from Germany, solidifying fears of deindustrialization.

(With inputs from agencies.)