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German economy avoids recession despite 0.3% contraction in 2023

German economy avoids recession despite 0.3% contraction in 2023

Posted on January 22, 2024   |  

In 2023, Germany's economy shrank by 0.3%, facing challenges like persistent inflation, high energy prices, and weak foreign demand, but it managed to avoid a recession.

The Gross Domestic Product (GDP) saw a 0.3% contraction throughout the year.

Despite a recent drop in inflation benefiting households, investments in residences and businesses are expected to decrease. 

Germany's economic recovery from the 2020 pandemic slump did not continue, but the GDP in 2023 was 0.7% higher than in 2019, the pre-pandemic year.

Economic performance in industries, excluding construction, declined by 2.0% in 2023, primarily due to lower production in the energy supply sector, while services contributed to overall growth.

Construction showed modest growth of 0.2% in 2023, influenced by worsening financing conditions, high building costs, and a shortage of skilled labor.

In 2023, household consumption fell by a price-adjusted 0.8%, government expenditure fell by 1.7%, and weak global economic growth impacted foreign trade, resulting in a 3.0% contraction in imports and a 1.8% decline in exports. 



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