The German economy has been contracting for two years in a row and is not expected to show significant growth in 2025. According to the Federal Statistical Office, the country’s GDP will have fallen by 0.2% in 2024 after falling by 0.3% in 2023. Amid economic stagnation, the German government has revised its growth forecast for 2025 downwards to 0.3% instead of the previously expected 1.1%, as announced by Economy Minister Robert Habeck.
Key factors in the crisis include the rejection of cheap energy resources from Russia, social programs that weaken labor incentives, and increasing competition from China. China, which used to be an active buyer of German products, is now increasing the production of goods with high added value, which has traditionally been Germany’s strength.
Chinese companies are now successfully competing with German ones in industries such as automotive manufacturing, industrial machine tools, specialty chemicals, and clean technologies. This reduces demand for German goods in China and reduces Germany’s export opportunities both at the European and global level.