According to Germany’s statistics agency Destatis, the largest European economy contracted by 0.3% in 2023. Alas, Germany’s gross domestic product has shrunk despite generous stimulus measures and the supportive fiscal policy. Analysts at Destatis tried to figure out what lies behind a slowdown in Germany’s economy known as the powerhouse of the EU economy.
The revised GDP matched the government’s flash estimates. Earlier in late September, citing well-informed sources Bloomberg reported that Germany’s authorities downgraded considerably their forecast for national economic growth. The previous forecast suggested that GDP could expand by 0.4% through 2023. However, the fundamental picture changed cardinally in September. Analysts had to revise their previous forecast and made the opposite conclusion. They warned that the domestic economy could fall by 0.3% through the whole of 2023.
Destatis CEO Dr. Ruth Brand pinpointed a series of detrimental factors that crippled Germany’s economy such as stubbornly high inflation, aggressive rate hikes by the monetary authorities, and a decline in domestic and overseas demand for Germany-made products.
At the end of November, Destatis analysts reported that production rates had been fizzling out in Germany’s major economic sectors. For instance, output in the manufacturing sector excluding the construction sector tumbled by 3.8% in Q3 2023 from a year ago. Exports also dropped to the same degree in the July – September quarter.
