German economy shrinks in Q4 2024 on weak foreign trade

The German Federal Statistical Office (Destatis) has announced the final growth data for the German economy covering the last quarter of 2024.

Accordingly, seasonally and calendar adjusted gross domestic product (GDP) in Germany decreased by 0.2 percent in the last quarter of last year compared to the previous quarter.

On Jan. 30, Destatis predicted the economy would shrink by 0.2 percent in the fourth quarter.

The German economy shrank by 0.4 percent compared to the same quarter in 2023.

After growing by 0.2 percent in the first quarter of last year, the economy shrank by 0.3 percent in the second quarter and grew by 0.1 percent in the third quarter.

The German economy is set to shrink by 0.2 percent year-on-year in 2024, the second year in a row, as structural problems and increasing competition with China weigh on the economy. The economy shrank by 0.3 percent in 2023.

The country's economy last experienced two consecutive years of recession in 2002-2003.

While private and public consumer spending increased in the last quarter of last year, foreign trade lost momentum.

Exports fell by 2.2 percent compared to the previous quarter, the sharpest decline since March 2020. Imports increased by 0.5 percent. Thus, foreign trade slowed economic growth by 1.2 points.

Consumer spending increased by 0.1 percent and public consumption by 0.4 percent.

It was noteworthy that investments in equipment, particularly machinery, devices and vehicles, fell by 0.3 percent, falling for the fifth consecutive quarter.

On the other hand, the Federation of German Industries (BDI) expects German GDP to fall by 0.1 percent this year, regardless of additional tariffs planned by US President Donald Trump.

The German Chamber of Commerce and Industry (DIHK) also predicts that the German economy will shrink by 0.5 percent this year. If these predictions come true, it will be the longest economic downturn in German history.

In its report on the economy published yesterday, the German Central Bank (Bundesbank) pointed out that the coalition government to be established in the country will take office in a difficult economic environment and made the assessment that "In terms of the basic trend, the German economy remains stuck in stagnation."