Germany's economy shrinks for a second year in a row as election looms

Germany's economy contracted by 0.2% last year after shrinking by 0.3% in 2023, latest data showed.

"According to first calculations of the Federal Statistical Office (Destatis), the price adjusted gross domestic product (GDP) was 0.2% lower in 2024 than in the previous year. The decline in economic performance in Germany also amounted to 0.2% after adjustment for calendar effects," a Destatis press release said.

"Cyclical and structural pressures stood in the way of better economic development in 2024," Ruth Brand added at a press conference held in Berlin on Germany's 2024 gross domestic product.

"These include increasing competition for the German export industry on key sales markets, high energy costs, an interest rate level that remains high, and an uncertain economic outlook. Against this backdrop, the German economy contracted once again in 2024," Brand continued.

After adjustment for price effects, whole economy gross value added fell by 0.4% in 2024, with significant differences in the performance of individual economic sectors.

"In manufacturing, output was down and gross value added dropped significantly (-3.0%) compared with the previous year. In particular, key sectors like the manufacture of machinery and equipment or the automotive industry saw a marked decline in production. Production remained at a low level in energy-intensive industrial branches, which include the chemical and metal-working industries for example. In 2023, production had decreased considerably owing to the sharp rise in energy prices," Destatis also noted in its press release.

In the construction industry, the year-on-year decline in gross value added in 2024, at -3.8%, was even somewhat more pronounced. In particular, with construction