Germany confirms 0.2% contraction in 2024

The German economy is expected to contract by 0.2% in 2024 as a whole , confirming figures released on 30 January by the Federal Statistical Office (Destatis). In quarterly terms, Germany's economic performance also showed a decline of around 0.2%.

Still, there may be signs of improvement, with the economic contraction improving slightly, as Germany had seen its Gross Domestic Product (GDP) decline to -0.4%.

"In the fourth quarter, exports of goods and services fell considerably (-2.2%) compared to the third quarter of 2024, after adjusting for seasonal and calendar prices," says the German statistics office. Destatis emphasizes that the last time there was such a "sharp decline" was in the second quarter of 2020. Exports of goods fell by 3.4% when compared to the previous quarter, being the index that put the most pressure on the economy at the end of the year.

In turn, imports of goods and services increased slightly, by around 0.5%. For this index, Destatis observed a decline in imports of goods (-1%), while imports of services grew by 4.2%.

"There were divergent trends for investment in the fourth quarter of 2024" in Germany, with spending on machinery and equipment falling for the fifth consecutive quarter. Still, capital creation grew by 0.4% in the fourth quarter of 2024, compared to the previous quarter.

It was also between October and December that consumption recorded a 0.2% increase in expenditure, with government consumption growing by 0.4%, a figure that compares with the 0.1% consumption of German households. In annual terms, Destatis confirms that household consumption increased by 0.3%, due to higher spending on health and non-durable goods, including food, gas and fuel, but the increase in government spending soared by 4% compared to 2023, after more spending on health and medicines and distributing more support to young people.