Economy experienced 0.3% GDP fall in Q4 of 2023

The German economy ended 2023 in negative territory, according to the Federal Statistical Office (Destatis), the country’s official economics statistics agency.

For the last quarter of 2023, the German economy experienced a 0.3 per cent fall in gross domestic product (GDP), when compared to Q3 2023, after adjustment for price, seasonal, and calendar variations. The fall was attributed to declining investment, while consumption increased slightly. 

In comparison to Q4 2022, Germany’s price-adjusted GDP fell by 0.4 per cent in Q4 2023. After the adjustment for price and calendar variations, a reduced fall of 0.2 per cent was registered as there was one working day less than a year ago.

Slight recovery of consumption expenditure 

However, there was a slight recovery of household final consumption expenditure in Q4 2023 (up by 0.2 per cent compared to the previous quarter) was driven by increased demand for services. Government final consumption expenditure also increased slightly (up by 0.3 per cent compared to the previous quarter). 

At the same time, capital formation tumbled with the fixed capital formation in construction down 1.7 per cent after price, seasonal, and calendar adjustments and gross fixed capital formation in machinery and equipment down 3.5 per cent. Exports of goods and services fell 1.6 per cent in Q4 2023 as imports declined by 1.7 per cent.

The weaker trade in goods was attributed to subdued foreign demand, ongoing geopolitical tensions, and high energy prices. In Q4 2023, gross value added after adjustment for price, seasonal and calendar variations, decreased by 0.4 per cent compared to the previous quarter with the largest falls in construction (-2.6 per cent) and manufacturing (-1.4 per cent). 

The production of motor vehicles, trailers, and semi-trailers increased but other sectors like the manufacture of machinery and equipment, the manufacture of electrical equipment, the manufacture of fabricated metal products, and the chemical industry declined. Gross value added in energy supply saw strong growth quarter over quarter. 

Gross value added in both the aggregated economic sector of trade, transport, accommodation, and food services and in other services declined by 0.9 per cent. Business services and public services, education, and health sectors both saw slight increases in Q4 2023.