Germany faces an economic recession and expectations of zero growth in 2024 | economy

A survey conducted by Bloomberg showed that Germany, the largest economy in Europe, is facing a slight economic recession, and its gross domestic product is expected to remain steady throughout 2024, according to Bloomberg.

According to this poll, analysts expect the gross domestic product to contract by 0.1% in the third quarter of the year, after a sudden contraction of the same percentage in the second quarter. Last month, analysts were expecting the economy to stabilize between July and September.

General expectations for annual growth also witnessed downward revisions from 0.1% to zero, according to the agency. However, these forecasts seem a little more optimistic compared to the German government, which last week lowered its forecast to a contraction of 0.2%.

What challenges does the German economy face?

The German economy faces several challenges, including:

• Interruption of energy supplies from Russia: Which greatly affected the industrial sector.
• Weak demand for exports from China: As the global economy suffers from weak growth.
• Problems in the automobile sector: Which is considered one of the most important economic sectors in Germany.
• Lack of skilled labor: This increases the complexity of restoring economic growth.

Sustained recession in 2024

2024 is likely to be the second consecutive year of German GDP contraction since the unification of East and West Germany in 1990.

In 2023, Germany was the only economy among the G7 countries to record a contraction of 0.3%, according to Bloomberg.

Bloomberg analysts believe that the industrial sector is the “Achilles’ heel” of the German economy, as Eric Jan van Haren, an analyst at Rabobank, said: “There is no clear catalyst for recovery. Reaching the bottom is the best scenario at the present time.”

2025 forecast

Analysts also expect growth of 0.8% for 2025, compared to a previous forecast of 1% growth. The German government estimates that the economy will grow by 1.1% next year.

According to the German Economy Ministry’s report, “economic weakness is expected to remain in the second half of 2024,” before economic momentum begins to gradually improve next year.

The report indicated that a “technical recession” (two consecutive quarters of contraction) likely occurred in the second and third quarters of the year.