Germany's Economic Struggles: A Downturn in Europe's Powerhouse

Germany's economy contracted for the second consecutive year in 2024, shrinking by 0.2% overall. High energy costs and weak global demand, especially from China, contributed to this decline. Despite a rise in consumer spending, the outlook remains bleak, with the possibility of a third year of recession.

Germany has witnessed its economy contract for the second consecutive year, signaling a significant downturn for Europe's largest economy. In 2024, Germany's economy shrank by 0.2% overall, aligning with economists' forecast, with a 0.1% dip in the final quarter, the Federal Statistics Office announced.

Ruth Brand, the president of the statistics office, noted during a press conference that cyclical and structural burdens have impeded economic progress. The European powerhouse is grappling with heightened foreign competition, high energy costs, elevated interest rates, and uncertain economic prospects.

With expectations of further economic decline, Germany's export-oriented economy faces challenges such as reduced global demand and competition from China. Analysts worry about a potential third year of recession despite a slight rise in consumer spending amid easing inflation and wage growth.

(With inputs from agencies.)