By Germany’s economy experienced a contraction in 2023, primarily due to high inflation that led to a decrease in consumer spending. The country’s industrial model also suffered from weak global demand.
According to preliminary data published by Germany’s statistics office Destatis on Monday, the price-adjusted gross domestic product (GDP) declined by 0.3% compared to the previous year. Destatis President Ruth Brand commented, “Overall economic development faltered in Germany in 2023 in an environment that continues to be marked by multiple crises.”
After adjusting for calendar effects, the decline in GDP was 0.1%, as per Destatis.
In 2022, Europe’s largest economy recorded an expansion of 1.8%, indicating a rebound from the pandemic shock. Brand highlighted that the GDP in 2023 was still 0.7% higher than in 2019, the year before the pandemic.
Economists anticipate a mild recovery in 2024, expecting inflation to cool down, interest rates to decrease, and real wage increases to stimulate household consumption. Germany’s central bank, the Bundesbank, projects a GDP growth of 0.4% for this year, while economists polled by FactSet anticipate a 0.3% growth.
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