Germany's Economic Struggles: Stagnation Amid Global Shifts

Germany's economy shrank for the second consecutive year in 2024, with a 0.2% contraction, showing no meaningful growth since 2019. Challenges include higher energy prices, strong Chinese competition, and internal issues like excessive bureaucracy. The collapse of the coalition government has led to early elections, as leaders propose contrasting solutions to revitalize the economy.

Germany's economic challenges deepen as the country's economy shrank for the second consecutive year in 2024. Amid consumer restraint and fierce Chinese competition, traditional exports like cars and industrial machinery suffered, highlighting Germany's decline as Europe's worst performing major economy, with no significant growth since 2019.

The recent 0.2% GDP contraction embodies these struggles, compounded by rising energy costs post-Russian gas loss and high interest rates deterring investment. The collapse of Chancellor Olaf Scholz's coalition government over economic policy set the stage for early elections as candidates debate revitalizing strategies amidst consumer anxiety.

Ruth Brand from the statistics office signaled further concerns, from excessive bureaucracy to a skilled labor shortage, while the looming threat of U.S. trade measures under President-elect Donald Trump casts a shadow on growth prospects. Despite rising disposable incomes, consumer spending remains subdued as outlooks stay pessimistic.

(With inputs from agencies.)