Summary

Germany’s GDP contracted by 0.2% in 2024, marking the second consecutive year of economic decline after a 0.3% drop in 2023.

The economy has been hit by a cost of living crisis, driven by high energy prices following the loss of Russian gas supplies, inflation, and reduced export demand, especially from key markets like China.

Political instability has worsened the situation, with Chancellor Olaf Scholz’s coalition collapsing in November over disagreements on debt policies, triggering snap elections amidst economic uncertainty.