In 2024, Germany’s economy is predicted to stagnate, falling behind its European counterparts despite a strong start to the year. According to the German economic institute IW, manufacturing and the construction sector are still in recession, with consumption being the only bright spot as it increases with easing inflation. However, this is not enough to spark a real upswing, as investments continue to lag due to geopolitical tensions and high interest rates.
Last year, Germany’s economy contracted by 0.2%, the weakest performance among big euro zone economies, due to factors such as high energy costs and lacklustre global orders. IW predicts zero growth for Europe’s largest economy this year, while France, Italy, Britain, and the United States are all expected to see expansion. Despite Germany narrowly avoiding a recession at the beginning of the year with a 0.2% growth in the first quarter, the outlook remains uncertain.
Foreign trade is expected to remain weak and offer little economic stimulus, while Germany’s unemployment rate is projected to rise to 6% on average for the year, up from 5.7% in 2023. With a record number of 46 million employed people on average in 2024