Germany’s gross domestic product (GDP) in 2024 was, according to preliminary calculations by the Federal Statistical Office (Destatis), 0.2 percent lower than in the previous year, calendar-adjusted. The decrease in economic output was also 0.2 percent, as the agency reported on Wednesday.
“Structural and cyclical burdens stood in the way of better economic development in 2024” said the President of the Federal Statistical Office, Ruth Brand, on Wednesday in Berlin. “This includes increasing competition for the German export industry on important markets, high energy costs, a still high interest rate level, as well as uncertain economic prospects. In this environment, the German economy shrank again in 2024” she added.
The price-adjusted total economic output decreased by 0.4 percent in 2024. There were significant differences between the individual economic sectors. The manufacturing industry produced less, with a decline of 3.0 percent. In particular, important sectors such as the machinery and automotive industries produced less. The production in the energy-intensive industries, including the chemical and metal industries, remained at a low level. In 2023, production had fallen significantly due to the strongly increased energy prices.
The construction industry also experienced a decline of 3.8 percent in 2024, according to the statistics. High construction prices and interest rates led to a decrease in the construction of residential buildings. The infrastructure sector, however, saw an increase in the modernization and construction of roads, rail tracks, and lines.
The service sector, on the other hand, developed positively, with an increase of 0.8 percent, although unevenly. The retail trade and the providers of transportation services recorded gains, while the wholesale trade, the automotive trade, and the gastronomy sector recorded a decline. The business services sector stagnated.
The information and communication sector continued its growth, with an increase of 2.5 percent. This also applied to the state-dominated sectors: in addition to the public administration itself, the education and healthcare sectors also grew. The total output of these sectors increased by 1.6 percent compared to the previous year.
Investments in fixed assets decreased by 2.8 percent, according to Destatis, with high construction costs having a negative impact on the construction investments. These decreased by 3.5 percent in 2024, with the housing construction sector experiencing a decline for the fourth year in a row. Investments in equipment, including machines, devices, and vehicles, also decreased, with a price-adjusted decline of 5.5 percent.
Private consumption showed only weak positive signals in 2024. It increased by 0.3 percent, the agency reported. The slowing down of inflation and wage increases for many employees could only moderately boost consumption. The private households’ consumption of health services and transportation services increased the most, with a price-adjusted increase of 2.8 percent and 2.1 percent, respectively. In contrast, the private households’ consumption of gastronomy and accommodation services decreased by 4.4 percent, and their clothing and shoe purchases decreased by 2.8 percent.
Government consumption, on the other hand, increased significantly, by 2.6 percent, mainly due to the increased social benefits, such as hospital care, medication, and care.
The difficult economic situation in 2024 also showed in foreign trade. The exports of goods and services decreased by 0.8 percent, with the main reasons being the lower exports of electrical equipment, machines, and vehicles. The price-adjusted imports increased by 0.2 percent, mainly driven by the stronger service imports.
In the annual average of 2024, 46.1 million people with a workplace in Germany were employed, surpassing the previous year’s value by 72,000 employees (0.2 percent) and reaching a new employment high. The increase in employment, however, lost its dynamism and came to a standstill at the end of 2024. The employment growth was only found in the service sectors, particularly in the public services, education, and healthcare sectors, while the number of employed people in the manufacturing and construction sectors decreased.
The state budgets closed the year 2024 with a budget deficit of approximately 113 billion euros, according to preliminary calculations, which is about 5.5 billion euros more than in the previous year. The states, municipalities, and the social insurance system increased their budget deficit, mainly due to higher expenses for social benefits and monetary social benefits, particularly for pensions and old-age pensions. The federal government, on the other hand, was able to reduce its budget deficit, with the measures to mitigate the energy crisis, including the gas and electricity price brake, having expired at the end of 2023. The budget deficit as a percentage of GDP in 2024, at 2.6 percent, is relatively high but still below the reference value of 3 percent from the European Stability and Growth Pact.