Market News

By Mark Schroers and Harumi Ichikura

(Bloomberg) -- Germany is suffering a mild recession and output across the whole of 2024 will be flat, according to a Bloomberg survey — underscoring the malaise in Europe’s largest economy.

Analysts in the poll see gross domestic product shrinking 0.1% in the third quarter, following a surprise contraction of that magnitude in the second. A month ago, they still forecast stagnation between July and September.

Their full-year projection also marks a downward revision from the 0.1% expansion previously envisioned. But it’s a tad more optimistic than the government, which last week slashed its forecast to a contraction of 0.2%.

Germany’s struggles are once again in the spotlight, with retrenchment by some of its top industrial firms adding to the gloom. The weakness is largely down to the cutoff of Russian energy supplies, disappointing export demand from China, problems among carmakers and a dearth of skilled workers.

A contraction in 2024 would be only the second time GDP declined in consecutive years since West and East Germany were reunified in 1990. In 2023, Germany was the only Group of Seven economy to shrink, by 0.3%.

“Industry remains the Achilles heel,” said Erik-Jan van Harn, an analyst at Rabobank. “There’s no clear catalyst for a turnaround. A bottoming out is the best case scenario for now.”

For 2025, analysts expect 0.8% growth compared with 1% before. The government’s new forecasts envisage 1.1%.

Germany’s “economic weakness likely continued in the second half of 2024, before growth momentum gradually increases again next year,” the Economy Ministry said Monday in a report, adding that a “technical recession” probably occurred in the second and third quarters. 

--With assistance from Iain Rogers.

(Updates with Economy Ministry in final paragraph)