German economy contracted for 2nd consecutive year in 2024
What's the story
Germany's economy, which is the biggest in Europe, shrunk for the second consecutive year in 2024. The country's gross domestic product (GDP) shrank by 0.2% last year, after a similar decline in 2023. The economic blow was disclosed by preliminary official figures released today, just weeks before an election in which the economy is a key issue.
Economic challenges
External shocks and domestic issues contribute to economic decline
The 0.2% contraction in Germany's GDP last year was confirmed by the Federal Statistical Office. Its head Ruth Brand hinted at a possible 0.1% shrinkage in the fourth quarter, compared with the previous three-month period. However, this is only a preliminary estimate as full economic data for December is still awaited. The German economy has been affected by external shocks as well as internal issues like regulatory red tape and skilled labor shortage.
Government collapse
Political instability exacerbates Germany's economic woes
Political instability has also contributed to Germany's financial woes. Chancellor Olaf Scholz's tri-party coalition government collapsed in November after a disagreement over economic revitalization strategies. This resulted in his finance minister's dismissal and paved the way for an early election on February 23. The upcoming election has triggered varied proposals from contenders seeking to reinvigorate the economy.