German Economy Faces Another Recession Amid Election Uncertainty

Germany's economy shrank by 0.2% in Q4, fanning recession fears amidst federal election uncertainty. Factors such as high energy costs and elevated interest rates contribute to a challenging economic environment. With negative growth potentially continuing into 2025, Germany faces a possible three-year economic decline.


Devdiscourse News Desk | Updated: 30-01-2025 14:49 IST | Created: 30-01-2025 14:38 IST
German Economy Faces Another Recession Amid Election Uncertainty
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Germany's economy contracted by 0.2% in the fourth quarter of last year, fueling renewed fears of a recession as the country heads into federal elections. The contraction exceeded analysts' expectations, who predicted a smaller decrease of 0.1%, according to preliminary data released by the statistics office.

Economic challenges such as increasing global competition, soaring energy costs, and rising interest rates continue to weigh heavily on Europe's largest economy. Already in its second consecutive year of contraction, Germany risks falling back into recession if the first quarter of 2025 also sees negative growth.

Amidst this economic uncertainty, the government's annual report has downgraded growth forecasts for 2025, anticipating just a 0.3% increase. This bleak outlook, compounded by domestic instability ahead of elections, has sparked concerns of a third consecutive year of decline, a situation not seen since the country's reunification.

(With inputs from agencies.)

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