The German economy contracted more than expected in the final quarter of last year, raising recession fears as the country faces uncertainty ahead of federal elections.
Germany’s GDP fell by 0.2% in the fourth quarter, worse than the 0.1% drop expected. If the economy contracts again in the first quarter of 2025, it will officially enter a recession.
The German economy has faced pressure from rising competition, high energy costs, high interest rates, and uncertain economic prospects. It shrank for a second year in 2024.
The government revised its 2025 growth forecast to 0.3% from an earlier 1.1% due to trade tensions and domestic uncertainty, especially ahead of the federal elections.
Some business groups predict further contraction in 2025, marking three years of decline, a first since reunification.
Economic issues led to the collapse of the government in November, triggering snap elections on 23rd February, with the economy as the main concern for voters.
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