Germany Faces Third Year of Economic Contraction Amid Persistent Recession Risks
The German economy faces a third consecutive year of contraction, with a forecasted shrink of 0.3% in 2024. Despite stronger-than-expected growth in the first quarter due to export frontloading, the outlook remains grim. Business sentiment is pessimistic, calling for urgent political action to stimulate economic recovery.
Germany is bracing for its third consecutive year of economic contraction, with the economy expected to shrink by 0.3% in 2024, according to the German Chamber of Commerce and Industry (DIHK). This marks the longest period of economic weakness in Germany's post-war history.
The DIHK's forecast is slightly better than the earlier prediction of a 0.5% contraction, thanks to stronger-than-expected growth during the first quarter, driven by export and industry frontloading ahead of U.S. tariffs. Despite this, the risk of recession remains a pressing concern for the export-oriented nation.
Businesses are urging the coalition government to take swift action to spur economic revival. The DIHK survey highlighted economic policy conditions, high labor costs, and low domestic demand as the primary risks, with nearly a third of companies planning to cut back on investments.
(With inputs from agencies.)
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