The Frankfurt Skyline at dusk on a November day.
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The German economy shrank by 0.2% compared to the quarter in the three months in December. This emerges from preliminary data published on Thursday by Germany's destatis destatis.
The number is adapted for price, calendar and seasonal variations.
Analysts surveyed from Reuters expected the gross domestic product (GDP) to drop by 0.1%.
The expenditure of household and state consumption rose, but exports were “significantly lower” than in the previous quarter, said Destatis.
“After a year that is characterized by economic and structural challenges, the German economy ended in a negative area in 2024,” she added.
Carsten Brzeski, Global Head of Macro at ING, said that there is now “a high probability that this downturn will lead to a winter recession”.
Germany's problems currently seem to concentrate on the country's industry, but this could change, he said in a note on Thursday.
“In view of the importance of industry for the entire economy, spillovers are already for other sectors – be it through feeling or real economic channels.”
The crucial industry is also not set for a “essential recovery”, since there are problems with inventory and order books and showed exports to the US web chair, as BRZESKI found.
The numbers on Thursday compared to an increase in GDP in the country in the third quarter of last year. The economic performance of Germany has long been sluggish, with the quarterly GDP readings floating around the flatline in the past two years. However, the economy has managed to avoid a technical recession.
The German economy was 0.3% or 0.2% on the basis of 2023 and 2024.
A certain break is expected in 2025, with the German government unveiling its forecast of 0.3% growth for the year on Wednesday – still a revision of the previous estimate of 1.1%.
“The diagnosis is serious,” said Robert Habeck, Minister of Economics and Climate, according to a CNBC translation during a press conference on Wednesday.
He added that the German economy has been stagnating for a long time. He referred to both internal and global political uncertainty as factors that led to the reduction of expectations, and added that the outgoing government could not fully implement its growth plans, since its term of office ended early.
A federal election in Germany is made for February 23, which is previously planned at the end of last year as planned due to the discussion of the ruling coalition of the country at the end of last year.
Habeck also said that the German economy gave structural problems that reflect a comment from Finance Minister Jörg Kukies last week.
“The structural weaknesses of our economy must be addressed,” Kukies told CNBC. “It is really important that we embark on a path of economic growth.”
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