Bloomberg: Germany faces economic recession and zero growth expected in 2024

Germany, Europe’s largest economy, is facing a slight recession, with gross domestic product expected to remain flat through 2024, according to Bloomberg.

According to the poll, analysts expect GDP to shrink by 0.1% in the third quarter of the year, after a surprise contraction of the same amount in the second quarter.

Last month, analysts had expected the economy to stabilize between July and September.

“The overall forecast for annual growth was also revised downward from 0.1% to zero,” the agency said.

However, this is slightly more optimistic than the German government, which last week cut its forecast to a 0.2% contraction.

According to experts, the German economy faces several challenges, including:

• Power supply disruption from Russia: This has had a major impact on the industry.
• Weak demand for exports from China: The global economy is suffering from weak growth.
• Problems in the automotive sector: which is considered one of the most important economic sectors in Germany.
• Shortage of skilled workers: This further complicates the restoration of economic growth.

This year, 2024, likely to be the second consecutive year of contraction in German GDP since the reunification of East and West Germany in 1990.

In 2023, Germany was the only G7 economy to contract by 0.3%, according to Bloomberg.

Bloomberg analysts see the manufacturing sector as the “Achilles heel” of the German economy, with Eric Jan van Haren, an analyst at Rabobank, saying, “There is no clear catalyst for recovery… Hitting the bottom is the best-case scenario at the moment”.

Analysts also expect growth of 0.8% for 2025, compared with a previous forecast of 1%.

The German government estimates the economy will grow by 1.1% next year.

According to the German Economy Ministry report, economic weakness is expected to persist in the second half of 2024, before economic momentum begins to gradually improve next year.

The report indicated that a technical recession (two consecutive quarters of contraction) likely occurred in the second and third quarters of the year.