Germany, in recession in 2023, is losing ground relative to major world economies

Germany, the driving force of the European economy in the 2010s, is now in the grip of worrying anaemia. In 2023, its gross domestic product (GDP) will contract by 0.3%, the German Statistical Office (Destatis) announced during a press conference on Monday 15 January. Although the decline may seem small, the euro zone’s largest economy actually threatens to stall. In fact, it exhibits much lower performance than the great powers. Since 2019, its GDP has grown by just 0.7%, compared to 4% for the European Union, 7.5% for the United States and 20.1% for China, Destatis noted.

“General development of the German economy has stalled, in an environment still marked by crisis”., announced Ruth Brand, president of the office. Germany, hitherto driven by its industry and exports, suffered from a cocktail of harmful effects. Despite recent declines, high prices in all sectors, especially energy, have weighed on the economy. Added to this was the deterioration of credit conditions associated with high interest rates. A slowdown in demand abroad and domestically did the rest.

The most impressive decline concerns industry, which creates about a quarter of the wealth across the Rhine. Excluding construction, output of manufactured goods fell 2% in 2023, mainly due to weakness Energy production and energy-intensive industries contracted for the second year in a row. Falling energy prices have not allowed these specialties, mainly chemicals and steel, to recoup losses since early 2022. Their production remains about 20% below their 2021 level, leaving permanent job losses in these traditional “manufactures”. Germany” fields.

The decline in household consumption (-0.8% in a year and -1.5% since 2019) is equally surprising. High inflation, averaging 5.9% in 2023, is the main reason for this decline, which is undoubtedly reinforced by a lack of confidence in the future despite low unemployment. However, the German state has also pulled back: Destatis observes that, for the first time in 20 years, public spending will fall by 1.7% in 2023 due to the end of restrictive measures. The fight against the Kovid-19 pandemic.

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