Germany's Economic Struggles: A Consecutive Year of Contraction

Germany's economy contracted for the second consecutive year in 2024, shrinking by 0.1% in the last quarter and 0.2% over the year. Weak global demand and competition from China impacted exports, which fell 0.8%. A potential winter recession looms if the economy continues to decline.

Germany's economy has faced another challenging year, marking its position as the eurozone's weakest performer once again. Despite its status as Europe's largest economy, Germany recorded a 0.1% contraction in the final quarter of the previous year and a 0.2% decrease over the whole of 2024, as reported by the Federal Statistics Office on Wednesday.

Analysts had anticipated a 0.2% drop in the gross domestic product (GDP) for 2024, aligning with the ultimate results. Germany, heavily reliant on exports, is grappling with subdued global demand and heightened competition from Chinese exports. This has led to a 0.8% decline in exports compared to the preceding year.

The continued contraction raises concerns of a winter recession if the economy records another negative quarter at the start of 2025. A technical recession is typically defined by two successive quarters of economic contraction.

(With inputs from agencies.)