Germany braces for first two-year recession in two decades
Make us a preferred source
Make us a preferred source on Google
The news: Germany is facing its first two-year recession since the early 2000s, with the government revising its 2024 GDP forecast to a contraction of 0.2%.
The numbers: In the government’s biannual projections released in April, Habeck had forecast Germany would grow at 0.3% this year. The downgrade follows a 0.3% decline in 2023.
The updated expectation includes predictions for a slow recovery, forecasting 1.1% growth in 2025, driven by higher household consumption, exports, and tax relief.
The context: If the predictions hold true, Europe’s largest economy will face its first two-year recession in two decades.
Economy Minister Robert Habeck cited rising inflation, high interest rates and geopolitical instability as key drivers of the downturn, with Germany’s industrial base, particularly the auto sector, suffering.
In July, Chancellor Olaf Scholz’s coalition approved a set of measures aimed at stimulating the economy, focusing on boosting private and public investment, accelerating renewable energy expansion and reducing bureaucracy.
What they said: In a statement, the economy ministry said that “early indications such as industrial production and the business climate suggest this phase of economic weakness will last into the second half of the year.”
“In the midst of the crises, Germany and Europe are squeezed between China and the US and have to learn to assert themselves,” Habeck said in a statement.
The sources: Bloomberg, The Financial Times
