Financial News: German Economy Contracts Unexpectedly In Q4

German Economy Contracts Unexpectedly In Q4

01/30/2025 - 06:33:00 (RTTNews)

(RTTNews) - The German economy logged an unexpected contraction in the fourth quarter on weaker exports amid cyclical and structural headwinds, preliminary data from Destatis showed Thursday.

Gross domestic product fell 0.2 percent from a quarter ago, confounding expectations for an expansion of 0.1 percent. This follows a 0.1 percent sequential growth in the third quarter.

Detailed results of GDP for the fourth quarter will be released only on February 25. However, Destatis said household and government consumption increased in the fourth quarter, while exports were significantly lower than in the third quarter.

On a yearly basis, GDP slid by calendar-adjusted 0.2 percent after falling 0.3 percent a quarter ago. Economists had forecast GDP to remain flat. This was the sixth consecutive contraction.

"After a year marked by economic and structural challenges, the German economy thus ended 2024 in negative territory," Destatis said.

In 2024, GDP registered a fall of 0.2 percent following a 0.3 percent decline in 2023. The statistical office therefore confirmed its first estimate for the annual GDP figure, which was released on January 15.

On Wednesday, the government downgraded its 2025 growth outlook to 0.3 percent from 1.1 percent. The International Monetary Fund also projected the largest euro area economy to grow 0.3 percent this year.

ING economist Carsten Brzeski said 2024 was the year when cyclical and structural headwinds became a storm.

"Looking ahead, besides some rather technical rebounds, a substantial recovery of German industry is not in sight just yet," the economist added.

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