The final major topic of discussion at the World Economic Forum (WEF) in Davos concerned the outlook for the remainder of 2024. All attention soon turned to the speech of German Federal Finance Minister Christian Lindner, who was to explain the surprisingly dismal state of Europe’s largest economy.
“I know what you’re thinking,” Lindner said frankly. “Germany is the sick man.” But those who think so overlook the fact that the German economy was stable and growing rapidly until 2012. The COVID-19 pandemic and the many wars had merely temporarily exhausted Germany.
“Germany [is] a tired man after a short night,” Lindner said. And immediately followed it with a charming joke: “What we need now is a strong cup of coffee!”
Germany is in Recession
Lindner’s unexpected humor was well received by the economic elite in Davos, as reported by the “Handelsblatt”. At the same time, he could not alleviate the concern over the negative economic development in Germany.
According to an initial estimate by the Federal Statistical Office in Wiesbaden, economic output in Germany declined last year. The gross domestic product (GDP) reportedly fell by 0.3 percent in 2023 compared to the previous year. A year earlier, according to the latest calculations, there was still 1.9 percent growth.
While the first quarter showed minimal, seasonally and calendar-adjusted economic growth of 0.1 percent from the previous quarter, the second and third quarters brought stagnation. In the final quarter, economic output finally shrank by 0.3 percent.
What is a Recession?
Economists speak of a “technical recession” when there are two consecutive quarters of declining economic output. Strictly speaking, this would be the case if the gross domestic product also declined in the current first quarter of the new year.
Even at the beginning of 2024, the economic prospects in Germany remain clouded. “The economic weakness persists into the turn of 2023/24,” explained the Federal Ministry of Economics.
