Article content
(Bloomberg) — German output was dragged down by a slump in investment in the fourth quarter — putting Europe’s biggest economy on course for its first recession since the pandemic.
Gross domestic product shrank 0.3% in the three months through December, as initially estimated, the statistics office said Friday. Capital investment plunged by 1.9%, while private consumption rose 0.2% and government spending advanced 0.3%.
Article content
The data highlight Germany’s protracted weakness — a performance that’s becoming an increasing concern for politicians in Berlin. The government this week slashed its growth forecast for 2024 to just 0.2%, following a 0.3% contraction over the whole of 2023.
The export-reliant economy has been suffering from weak foreign demand, high interest rates, the loss of Russian energy supplies and geopolitical tensions. Disagreements within Chancellor Olaf Scholz’s three-party coalition and a court ruling disrupting its spending plans have heightened uncertainty.
Manufacturing, on which Germany relies more than many other countries for growth, has been in a long downturn. A survey Thursday showed the retreat unexpectedly deepened in February as new orders plummeted both at home and abroad.
The Bundesbank reckons GDP may drop again in the first quarter, which would tip the country into a recession. That may feed the debate about Germany’s longer-term prospects, which are clouded by concerns over excessive bureaucracy, a quickly aging workforce and a lack of investment in infrastructure and crucial technologies.
“We need to do more to tackle the reforms in order to maintain Germany’s competitiveness in a completely changed environment,” Economy Minister Robert Habeck said Wednesday.
Rate cuts by the European Central Bank and some of its peers expected in the coming months may bring some relief. Pay increases for workers and slowing inflation are meanwhile seen stoking private consumption.
—With assistance from Kristian Siedenburg and Joel Rinneby.
Share this article in your social network
German Economy Suffered Investment Slump at End of Last Year - Financial Post
Read More
No comments:
Post a Comment