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The empire of Europe is collapsing! Germany is dealing with recession as the property market collapses

Germany is teetering on the brink of recession as manufacturing and real estate crises grip the eurozone's biggest economy.

The German economy shrank by 0.3% in the final quarter of 2023, according to the Federal Statistical Office, as investment in construction and machinery fell, reports

After six months of flat output Germany has not grown since the first months of 2023. The economy shrank by 0.3% compared to 2023 overall.


Activity is falling after German industry is cut off from cheap Russian energy and as demand from China declines. Car factories have also faced problems with spare parts passing through the Red Sea.

Adding to the country's woes, the housing market is also struggling.

Property prices fall and developers cancel projects, causing a downturn in the construction industry.

The rail strikes point to a difficult start to 2024, raising the prospect that GDP will shrink again in the first quarter of the year and push the country into a formal recession.

Carsten Brzeski, an economist at ING, said the German economy was in a "permanent state of crisis".

He said: “With an average quarterly growth rate of 0% from the second quarter of 2022, the German economy is anything but fast growing.

“The best way to describe the state of the German economy is that it is in a shallow recession. In fact, the economy remains stuck in the twilight zone between recession and stagnation."

Elsewhere, the French economy continues to be solid, marking the second straight quarter of no growth. Retail sales and hospitality struggled, while business investment also fell as high interest rates pushed up companies' funding costs.

The country is fighting to end recession by 2024, but with farmers besieging Paris and other major cities in protest against EU rules and red tape, it's not going to happen.

In contrast, growth in Spain and Italy accelerated in the final months of 2023 with growth of 0.6% and 0.2% respectively. Spain in particular has been a star performer, boosted in part by a strong recovery in tourism.

Performance in the regions helped the eurozone avoid recession by the narrowest of margins. It showed no growth in the fourth quarter, according to Eurostat, after contracting 0.1 percent in the previous quarter.

In 2023 as a whole, the GDP of the eurozone grew by 0.5%.

Diego Iscaro, economist at S&P Global Market Intelligence, said: “The outlook for 2024 remains challenging amid faltering demand and rising geopolitical tensions.

"We believe that eurozone activity will remain essentially stagnant during the first half of 2024."

The International Monetary Fund (IMF) has cut its growth forecast for Germany this year, predicting that GDP will grow by 0.5% in 2024 – down from the 0.9% previously forecast in October.

This represents the biggest downgrade of any G7 economy.

France is expected to grow 1%, down 0.3 percentage points from previous forecasts, while the eurozone as a whole will grow 0.9%, down from a forecast of 1.2% three months ago.

The IMF said that while much of the world proved more resilient than expected in the second half of 2023, "the growing momentum was not felt everywhere".

It added that there was "particularly sluggish growth in the euro area, reflecting weak consumer sentiment, the lingering effects of high energy prices and weakness in interest-sensitive manufacturing and business investment."




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