THE GERMAN ECONOMY: RECESSION OF 2024 AND CHALLENGES FOR 2025

Abstract

This article analyzes Germany’s economic developments in 2024, which largely determine the prospects for 2025. The German economy has been in a recession for the second consecutive year. The author examines the key macroeconomic indicators as well as the internal and external causes of GDP decline. Particular attention is given to industrial production, inflation – including the dynamics of electricity prices - investments in fixed capital, labor market conditions, foreign trade. Furthermore, the article reviews the actions of the German federal government in 2024 regarding economic legislation. In particular, it addresses the escalating contradictions within «the traffic light» coalition, which were driven by its compromise-based nature. These conflicts ultimately led to the coalition’s collapse in early November 2024, followed by a vote of no confidence against the chancellor and the decision of the federal president to schedule early parliamentary elections for February 23, 2025. In the course of the election campaign, the established parties entered into an intensive debate about the economic future of one of the leading members of the European Union. The author assesses this debate, identifies the key external and internal challenges facing Germany as a business location, and forecasts the country’s economic development, which is likely to experience yet another year of recession.

Keywords

• germany
• european union
• eu
• economy
• economic standort
• crisis
• recession
• parties
• "traffic light"
• coalition
• early elections
• bundestag