HomeFinance NewsEconomyGerman Economy Dodges Recession, But Brace for a Bumpy Ride Ahead

German Economy Dodges Recession, But Brace for a Bumpy Ride Ahead


Germany skirts recession at the end of 2023 but faces prolonged slump


The German economy stagnated in 2023.

Europe’s largest economy contracted by 0.3% in 2023 compared to the previous year, as high inflation and interest rates dampened growth.

Manufacturing, particularly in the energy sector, declined sharply and overall production fell by 2%.

Domestic demand and foreign trade were also weak, leading to a decrease in household consumption and government spending.

Although the economy avoided a technical recession, with GDP growth showing stability in the third quarter, early indicators suggest the challenges will persist in the near future.

Capital Economics predicts no economic growth in 2024 due to continued recessionary conditions.

  • Overall sentiment: negative
  • Positive


    “The manufacturing sector, excluding construction, fell by a sharp 2%, led by lower production in the energy supply sector.”

    “The fourth quarter recorded a similar 0.3% drop compared with the July-September period.”

    “Weak domestic demand last year and “subdued global economic dynamics” also stifled foreign trade, despite a drop in prices.”

    “Household consumption contracted by 0.8% on the year, adjusted for prices, while government expenses slimmed by 1.7%.”

    “Early indicators do not signal a quick German economic recovery is in the cards, a German economy ministry report out Monday warned, according to Reuters.”

    “Capital Economics also expects Germany’s troubles are not yet over and forecasts no growth for the country in 2024.”

    “The German economy faced the throes of a deep budgetary crisis at the end of last year, after a constitutional court ruling over the national borrowing restrictions threatened a $17-billion-euro gap in the country’s 2024 spending plans.”

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