German GDP in 2023 decreased for the first time since 2020

In 2023, German GDP declined for the first time since 2020 due to high inflation, rising interest rates and a general decline in activity both inside and outside the country. 

Preliminary data from the Federal Statistical Agency of Germany (Destatis) indicated a decrease in the volume of the economy, adjusted for inflation, by 0.3% compared with 2022. Taking into account inflation and calendar factors, this decrease amounted to 0.1%.

Destatis President, Ruth Brand, noted that the economic dynamics in Germany deteriorated in 2023 due to various crises. High energy prices have put pressure on the economy at all stages of the production process and slowed growth. The rise in interest rates has also created unfavorable financial conditions, and the decline in domestic and external demand has had a negative impact.

It is worth noting that Germany's GDP in 2023 was 0.7% higher than in the pre-2019 year, which also indicates the complexity of the situation.

Forecasts for 2024 remain negative – analysts expect modest economic growth of 0.5%. The German economy is under pressure due to the loss of Russian energy resources, and high energy prices remain one of the main reasons for the decline of the German economy.

Consumer spending in the country decreased by 0.8%, government spending fell by 1.7% for the first time in almost 20 years, and investments in fixed assets decreased by 0.3%. Exports decreased by 1.8% and imports by 3%. The manufacturing sector fell by 2%, while the construction sector showed a slight increase of 0.2%.