2024-02-23 07:45:07
“Weak foreign demand, persistent geopolitical tensions and high energy prices” have weighed down Europe’s largest economy, following two consecutive quarters of stagnation, commented the Destatis statistics institute in a press release.
These figures confirm a first estimate from Destatis at the end of January.
Over the whole of 2023, the German economy also contracted by 0.3%, Destatis announced earlier in the month.
Germany is doing significantly worse than the euro zone average, which achieved growth of 0.5% in 2023, according to Eurostat, with increases for France, Spain and Italy.
The country is weighed down by the crisis in its powerful industrial sector, which represents around 20% of the wealth produced.
Since the war in Ukraine, it has suffered from excessively high energy costs with the end of Russian gas deliveries and interest rates set at a high level by the European Central Bank (ECB), which is slowing down demand and investments.
In the last quarter of 2023, investments in construction decreased by 1.7% and investments in equipment by 3.5%, according to Destatis.
International trade, weighed down in particular by a slowing China, cannot compensate for weak domestic demand or maintain the high level of exports which were the strength of the German economy.
Added to this is the handicap of a labor shortage, with thousands of vacant positions and a difficult climate transition for many branches, which believe that they do not have as many subsidies as their competitors, notably Americans.
After this poor end-of-year result, the start of 2024 is also worrying.
GDP should “decrease slightly once more in the first quarter of 2024”, the German Federal Bank warned in mid-February, while orders in industry and construction are falling.
This situation “is a challenge, an extreme challenge,” Economy Minister Robert Habeck said on Wednesday.
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