Economic output in Europe’s largest economy records first two-year contraction since 2003
Germany’s economy contracted for the second consecutive year in 2024, marking its first two-year decline since 2003, with GDP shrinking by 0.2%. Factors like rising energy costs, lagging adaptation to electric vehicles, competition from Chinese manufacturers, and fallout from protectionist U.S. trade policies compounded the downturn. The auto industry faces significant challenges, with major layoffs looming, while industrial production has fallen 15% since its peak in 2017. With the possibility of new U.S. tariffs, a fractured political landscape, and stagnation forecasts for 2025, Germany’s economic outlook remains grim. However, a new government could pursue fiscal reforms and pro-business policies to foster recovery.
My Take
Germany’s economic struggles highlight the urgency of aligning industrial strategies with global energy, technology, and trade shifts. For businesses, this serves as a reminder to prioritize agility and innovation to stay competitive.
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Credit: WSJ
This post reflects my own thoughts and analysis, whether informed by media reports, personal insights, or professional experience. While enhanced with AI assistance, it has been thoroughly reviewed and edited to ensure clarity and relevance.