The German economy has shrunk for the second consecutive year. The economy is now 5% smaller than it would’ve been if the pre-COVID growth trend was maintained. This contraction is largely due to a combination of cyclical and structural pressures, including high energy costs, increased competition from China, and a longstanding housebuilding crisis.
Germany currently has no government, 2 years of no economic growth, a collapsing industrial sector, investor sentiment through the floor, and a reigniting energy crisis. Despite these significant challenges, German stocks closed at a new all-time high today. This highlights the divergence between stock market performance and the real economy. While the stock market reflects investor optimism, the underlying economy is grappling with substantial issues.
Bloomberg Economics estimates that the shortfall in the German economy will be tough to recover from, due to structural blows like the loss of cheap Russian energy. The German economy’s performance has been further complicated by geopolitical tensions and the transition to electric vehicles in the automotive sector.
In summary, although the DAX keeps flying and the stock market is reaching new heights, the German economy continues to face substantial challenges. Significant policy reforms and strategic investments will be necessary to address both cyclical and structural issues and pave the way for a robust recovery. So, the only accepted assessment here is: “German economy is doing great,” right?
Sources:
https://www.telegraph.co.uk/business/2025/01/15/german-economy-shrinks-for-second-successive-year/
https://apnews.com/article/germany-economy-gdp-2024-election-edb9e2d9b4ab5b13c377354b5bfdc904
Germany currently has:
– no government
– 2 years of no economic growth
– collapsing industrial sector
– Investors sentiment through the floor
– a reigniting energy crisisBut the DAX keeps flying so the only accepted assessment here is: “German economy is doing great” right?😌 pic.twitter.com/SPGbjco1la
— JustDario 🏊♂️ (@DarioCpx) January 17, 2025
German Stocks closed at a new all-time high today 📈 pic.twitter.com/kjliWPLDPD
— Barchart (@Barchart) January 16, 2025
Germany’s economy is unraveling 🇩🇪🚨
📉 The economy is now 5% smaller than it would’ve been if the pre-COVID growth trend was maintained
⚠️ Bloomberg Economics estimates that the shortfall will be tough to recover, due to structural blows like the loss of cheap Russian energy pic.twitter.com/FQJUEypTyh— Stephen Stapczynski (@SStapczynski) December 16, 2024
🇩🇪 German economy shrinks for second consecutive year
Take that Putin! pic.twitter.com/2qgN3YEDnE
— Lord Bebo (@MyLordBebo) January 15, 2025
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