Growth in the EU’s powerhouse has gotten off to a slow start this year due to persistent economic headwinds, analysts believe
The German economy has probably failed to grow again at the start of 2024 after contracting in the final quarter of last year, Bloomberg reported on Monday.
Analysts surveyed by the outlet said they now expect GDP to stall in the first three months of the year. A third of respondents are reportedly even more pessimistic and are projecting a contraction.
“The data still point toward a modest contraction in the first quarter, although it seems like the bottom is near,” Rabobank analyst Erik-Jan van Harn told Bloomberg. “Sentiment improved a little in the manufacturing sector, while activity remains robust in the services sector.”
Germany’s central bank, the Bundesbank, said last month that the economy was faring worse than predicted and that its rebound would probably be delayed. Output may “stagnate at best” in the first quarter, the regulator warned.
According to official data released last month, the economy contracted by 0.3% last year on an annual basis. However, thanks to an upward revision of the third-quarter figures, the economy has so far managed to avoid a technical recession, which is defined as two consecutive quarters of negative growth.
Germany was the only G7 economy to contract last year as it has struggled with the fallout from the energy crisis. Economists, including at the country’s two largest lenders, Deutsche Bank and Commerzbank, predict another contraction in 2024. Analysts say that even if the German economy does manage to expand this year, persistent industrial and budgetary woes will hamper a recovery from the country’s weakest annual performance in a generation.
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