(Finance) – TheGerman economywhich represents approximately a third of the Eurozone’s GDPis set to contract again this year after the decline recorded in 2023. The government has in fact revised its forecasts for gross domestic product (GDP) downwards for 2024, estimating a reduction of 0.2%. This decline, following the contraction of 0.3% last yearwould mark the second consecutive sequence of GDP reductions since the reunification of West and East Germany in 1990.
Initially, the Minister of Economy, Robert Habeckhe had predicted one growth of 0.3% for the current year in government forecasts published at the end of April. However, according to a recent email statement reported by Bloomberg, economic recovery is now likely to occur only in 2025, with a estimated growth of 1.1% and acceleration to 1.6% in 2026. Habeck emphasized the urgent need to address the country’s structural problemsincluding the lack of energy security, excessive bureaucracy and the shortage of skilled workers, which are weighing down the economic climate, along with geopolitical uncertainties.
“Germany and Europe are squeezed between China and the United States and they must learn to assert themselves,” Habeck said. Concerns about Germany’s economic decline have increased, especially in the automotive sector, with emblematic cases such as Volkswagen’s possible plant closures and Intel’s delay in opening a semiconductor plant from 30 billion euros in the former East Germany. The economy may already be in technical recession, with a possible new contraction in the third quarter, following the 0.1% drop in output recorded between April and June.