Economic situation: The German economy shrank at the end of the year

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The authority thus confirmed an initial estimate. Economists also expect a difficult year in 2024. Last year, Europe’s largest economy entered a mild recession.

Many economists expect a weak start to the current year. “There are the government’s austerity measures, but also ongoing strikes by train drivers and disruptions to supply chains due to the military conflict in the Red Sea,” said Carsten Brzeski, ING’s chief economist. A further decline in the German economy in the first quarter of 2024 seems more likely.

According to Timo Wollmershäuser, economic director of Ifo, companies in almost all economic sectors are complaining about declining demand. In addition, the economy is burdened by a number of special factors. “These include the high levels of illness, the strikes at Deutsche Bahn and the exceptionally cold and snowy January. But there are first bright spots in private consumption.”

The outlook for the full year 2024 was clouded recently. Economic research institutes lowered their expectations. Some economists do not rule out a further decline in gross domestic product for the entire year.

The hope for the current year rests mainly on people’s desire to consume. “Thanks to the strong real wage increases, private consumption in particular is likely to increase again,” KfW chief economist Fritzi Köhler-Geib expects. According to forecasts, inflation will fall this year, while at the same time wages will rise.

For the whole of 2023, economic production, adjusted for prices, fell by 0.3 percent compared to the previous year. Here too, the authority confirmed preliminary data. Last year, private consumption failed to provide significant economic support. At the same time, German exporters felt the weakness in global trade, and rising real estate interest rates slowed construction. (SDA)

Source: Blick