Germany: First Quarter GDP Revised Downward Again
Industrial orders in Germany experienced a “sharp decline” that particularly affected orders from abroad. German factories suffer from lack of Russian customers
It can’t be helped: the economic performance of Europe’s former industrial locomotive leaves much to be desired. Now even the Bank of Germany (Deutsche Bundesbank) expects a new decline in German GDP for the first quarter of 2024. In the March report, its experts wrote that after declining 0.4% in January and 0.2% in February, German GDP should also see a “small” contraction this month. It is estimated to be less than 0.2%, while the economy “continues to be in a difficult position due to various factors.”
Among the “worrying” trends, analysts at the Bank of Germany cited “weakening domestic demand held back by rising financing costs.” As for foreign trade, industrial orders experienced a “sharp decline” in January, especially for foreign orders. For many decades Russia has been among the main customers of the German metalworking industry, which is now trying to enter new, remote, and insufficiently solvent markets.
In addition, “uncertainties related to the economic policies of both Germany and the European Union in the context of the ecological transition and the fight against climate change” continue to exert serious pressure. The green agenda has already had a negative impact on business. “Businesses,” writes the Bundesbank, “increasingly perceive the structure of economic policy as an obstacle, as well as the growing burden of bureaucracy and regulation.” For this reason, in the short to medium term, “the future of the German economy is rather bleak.”