The German Industries Union said today, Tuesday, that the German economy is suffering from a deep crisis, as the GDP is likely to shrink 0.1% this year, to tend to record a decline in growth for the third year in a row for the first time since the reunification of the country.
At the same time, the Union said that the euro area is expected to record 1.1% growth and the global economy will grow by 3.2%, indicating that Germany will remain one of the economically late countries in the region with a unified currency.
“The situation is very dangerous, as growth in the industrial sector in particular suffers from a structural collapse,” said Peter Leipinger.
The increasing competition from abroad, high energy costs, and the continued high interest rates, as well as the mysterious economic prospects for the German economy, which shrinkled in 2024 for the second year in a row.
Germany’s economy recorded a contraction in 2024, when GDP in the largest economy in the eurozone declined by 0.2%, according to preliminary data from the Federal Statistics Agency (Destiesis), after a contraction of 0.3% in 2023.
Business climate in Germany
“The German economy is still pessimistic, while commenting on the German business climate index that rose this month.”
For his part, Ulrich Catter, chief economist at the Deca Bank Bank, said that there are yet no indications of an optimistic climate in the German economy.
He added, “According to these figures, the German economy will remain stagnant in the first half of this year,” according to the German news agency.
The business climate in Germany improved somewhat at the beginning of the new year thanks to a better assessment of the current situation.
The Evo Institute announced that its German business climate has increased by 0.4 points to 85.1 points. This is the first increase after two consecutive stags.
Economists expected the index to score 84.8 points. However, the companies included in the Evo poll, which numbered about 9,000 companies were more pessimistic about the future, as the index of future business expectations continued to decline.
