In 2024, Germany’s economic system was on a downward trajectory, and 2025 is likely not to be a period of growth and prosperity.
It is worth noting that the economy of the mentioned country has been showing a negative dynamic for the second year in a row. The statistics office of Germany on Wednesday, January 15, published information according to which the country’s gross domestic product (GDP) fell by 0.2% in 2024. In 2023, the corresponding indicator decreased by 0.3%. This is the second time since 1950 that output has been contracted two years in a row in Germany.
It is worth noting that the German economic system is one of the largest in the European Union.
The current condition of the mentioned country’s economy is, among other things, a particularly sensitive political issue. This circumstance is because early government elections will be held in Germany next month. The economic aspect of a country’s existence as a functional system is one of the main criteria for assessing the standard of living in a particular state. Moreover, society’s perception of the effectiveness of the ruling political force is largely based precisely on the state of affairs in the area of financial and material well-being, both at the level of the personal being of citizens and in the broader country’s context.
It is expected that the economic issue will become one of the main issues in the electoral process in Germany. Many pin their hopes on the new government’s implementation of policy, which is largely focused on ensuring the country’s GDP growth. It is worth noting separately that the state of affairs in the German economy is a sensitive and, in a sense, fundamental factor affecting the economic condition of the entire eurozone, consisting of 20 countries.
At the same time, it is virtually obvious that in the context of the difficult economic situation that Berlin is facing as an insurmountable fact of reality, there is no possibility of quick and even simpler solutions. The current state of affairs is the result of the combined impact of circumstances such as weak consumer demand at the global level, production malaise, which has become particularly painful for carmakers, the lingering effects of the energy crisis, excessive bureaucratic practices, and a shortage of skilled workers. In this case, the negative situation has structural causes, which cannot be eliminated without a broad-based approach focused on fundamental goals.
Timo Wollmershäuser, who heads forecasting at the Ifo Institute, said that Germany is experiencing by far the longest phase of stagnation in its post-war history. It was also noted separately that the country is falling behind considerably in an international comparison.
The Ifo forecasts German GDP growth of 0.4% in 2025. The institute characterizes the corresponding growth as barely perceptible.
It’s worth noting that Germany was the only one of the Group of Seven countries which economy declined in 2023. Berlin is also the first of this association of world capitals to publish GDP data for 2024.
The Bundesbank predicts that the German economy will grow by 0.2% in 2025. The country’s financial regulator also warns of the risk of another year of the negative dynamic if US President-elect Donald Trump implements his threats related to the intention to raise tariffs on imported goods.
As we have reported earlier, JPMorgan Chase Reportedly Eyes Commercial Banking Expansion in Germany.
