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High inflation slowed private consumption, which provided important economic support. In 2022, Europe’s largest economy grew by 1.8 percent. According to economists, the outlook for the current year has deteriorated. Some also fear a decline in economic output in 2024.
According to a first estimate from the Federal Office, the German economy shrank in the fourth quarter of 2023. According to previous findings, GDP fell by 0.3 percent quarter on quarter after price, seasonal and calendar adjustments, as the head of the authority Ruth Brand announced at a press conference in Berlin.
In 2023 as a whole, private consumption failed to support the economy. Given the sharp rise in consumer prices, many people rejected the red pencil. According to preliminary data, the annual average inflation rate was 5.9 percent. This was the second highest value since reunification, after an average inflation rate of 6.9 percent in 2022.
Meanwhile, foreign trade made a positive contribution as imports fell even more than exports. Construction investments fell significantly within a year.
This year too, many economists do not expect a sustainable recovery in Europe’s largest economy. Many economic researchers have recently lowered their forecasts and now expect growth of significantly less than one percent.
Some economists do not rule out a further decline in gross domestic product. The Institute for Macroeconomics and Business Research (IMK) of the trade union Hans Böckler Foundation sees the debt brake as one of the main causes, which makes important investments in climate protection and infrastructure difficult.
The ruling of the Federal Constitutional Court of November 15 forces the traffic light coalition to save money and limits its financial leeway. Last year, the German tax authorities once again spent more money than they received. According to preliminary data, the deficits at federal, state, local and social levels amounted to more than 82.7 billion euros.
Nevertheless, after two outliers in the Corona years 2020 and 2021, Germany complied with the European debt rule for the second year in a row: based on total economic production, the deficit last year was 2.0 percent according to preliminary calculations. In 2022 that was 2.5 percent.
The European Stability and Growth Pact allows EU countries to have a budget deficit of up to three percent and a total debt of up to 60 percent of nominal GDP. The rules were temporarily suspended due to expensive Corona relief programs. (SDA)
Source: Blick
I am Amelia James, a passionate journalist with a deep-rooted interest in current affairs. I have more than five years of experience in the media industry, working both as an author and editor for 24 Instant News. My main focus lies in international news, particularly regional conflicts and political issues around the world.
