Germany's Economy Forecast to Contract in 2024

Germany's economy is projected to continue underperforming compared to the eurozone average until at least 2026, with a GDP contraction of 0.1% expected in 2024, according to the European Commission's Autumn Forecast. This marks a downward revision from previous expectations of slight growth, highlighting ongoing challenges such as weakened global demand for industrial goods and domestic economic uncertainty. Despite these difficulties, a modest recovery is anticipated, with GDP growth forecasted at 0.7% in 2025 and 1.3% in 2026, though still below the eurozone average of 1.6%. Easing inflation, which has dropped to 2.4% as of October 2024 from a peak of 11.6% in October 2022, is expected to support real wage growth and boost private consumption. Germany's position as the weakest performer among the G7 economies underscores its struggle to regain economic momentum post-pandemic and amid geopolitical tensions. Analysts suggest that while recovery may be slow, improving household incomes and investment could eventually revitalize the economy.