Preliminary data published by the Federal Statistical Office (Destatis) showed that in the 4th quarter, GDP fell by 0.3%, as expected, after remaining unchanged in the 3rd quarter (revised from -0.1%). Destatis said that compared with the previous quarter, there was a marked decline, in particular, in gross fixed capital formation in construction and in machinery and equipment. Meanwhile, in 2023, price adjusted GDP fell by 0.3%. After price and calendar adjustment, the decline amounted to 0.1%.
In annual terms, GDP declined by 0.2% in the 4th quarter, confirming consensus estimates. Meanwhile, the data for the third quarter were revised upward - to -0.3% from -0.4%.
Looking ahead, at least in the first months of 2024, many of the recent drags on growth will still be around and will, in some cases, have an even stronger impact than in 2023. The Ifo Institute said today that the German economy is expected to contract by 0.2% in the first quarter of 2024. "This would leave the German economy in recession," said Timo Wollmershaeuser, the institute's head of economic research. Meanwhile, Germany's central bank expects growth to slowly recover this year, forecasting the economy to expand 0.4% for 2024.