Germany's DIHK chambers of industry and commerce said high energy prices, heavy bureaucracy, a shortage of skilled labor and weak domestic demand will put pressure on the German economy this year. Against this background, DIHK experts predict that gross domestic product will decrease by 0.5%. According to official data, the economy contracted by 0.3% last year, which marks Germany's first annual economic slump since the COVID pandemic began in 2020. If GDP declines in 2024, it would be only the second time in Germany's post-war history where the economy contracted for two years in a row. The first case was in 2002 and 2003.
Meanwhile, the results of the DIHK survey showed that 35% of respondents (out of more than 27,000 companies surveyed) expect business conditions to deteriorate in the next 12 months, and only 14% expect improvement. 3 out of 5 companies view the country's economic policy as a business risk, and 33% of firms plan to reduce investments in Germany in the next 12 months, while 24% said they plan to increase investments.
The German government is expected to present updated economic forecasts for 2024 next week, with sources saying that the forecast for GDP growth is likely to be lowered to 0.2%.