Persistent Weakness in the German Economy

The Bundesbank highlights ongoing stagnation in the German economy, with the industrial and construction sectors experiencing significant weakness. Consumer sentiment remains cautious, and a recession is anticipated in 2024, marked by a decline in GDP during the fourth quarter.

High inflation continues to plague the economy, driven by factors such as the CO2 price, the Germany ticket, and elevated service costs. The construction industry foresees further challenges, with a notable drop in new building permits and a decrease in revenue.

Despite a slight recovery in consumer spending, overall growth remains elusive. The outlook for the industrial sector is dim, as external orders decline and competitiveness wanes against global players like China.

The combination of rising interest rates and material costs further exacerbates the construction crisis, compelling the sector to confront its prolonged downturn. With no immediate signs of recovery, the Bundesbank projects that weakness will persist into 2025, leaving the economy in a precarious state.