Germany, what year will 2024 be? The German economy can surprise

Germany ended 2023 with a bitter economic record.
Even if the German nation finally begins to expand again in 2024, it will struggle to shake off the depression behind one of its weakest annual performances in a generation according to a Bloomberg analysis.
Plagued by energy and infrastructure problems, hit by a decline in global demand, pressured by the need to loosen trade ties with China and behind in the race for electric vehicle dominance, the country has likely ended 2023 in recession.
Always a European power, Germany is grappling with a complex mix of short-term and longer-term problems which – together with a divided and apparently ineffective government – have led economists to speak of the "sick man of Europe" referring to the A country hitherto known for being the engine of the old continent.
2024 is therefore highly anticipated by economists and experts and could reserve surprises on Germany's economic stability.
Deeper crisis or gradual recovery? The answer to this question affects Berlin and all the main European nations.
read also Another sign of recession from Germany: greenhouse gas emissions collapse Germany 2024: economic forecasts on the sick man of Europe Germany began 2024 with the hope of finding the road to recovery again.
However, the path still appears arduous.
With next week's industrial data likely to show little improvement from a three-year low, the government forced to boost investment and the threat of rail strikes looming, few economists are predicting good prospects at the moment.
A nation long considered the engine of the euro zone is trying to rekindle its engine.
“We are quite pessimistic about German growth this year,” said Stefan Schneider, chief economist for Germany at Deutsche Bank Research.
“A combination of cyclical and structural pressures is currently crushing hopes that the country can untie the knot and return to previous growth rates of between 1.5 and 2 percent in the near future.” The general impression is that there will be a second quarter of contraction which is conventionally described as a recession.
A more complete indication will be available on January 15, when German officials reveal the G7's first national estimate for full-year GDP in 2023.
A slight annual decline is expected, estimated by the Bundesbank at 0.1%, while the European Commission predicted a decline of 0.3%.
The German Central Bank expects overall growth of just 0.4% in 2024.
That would be an improvement over 2023, but still one of the worst results this century, along with inflation that officials say will last longer.
long compared to other major eurozone economies.
Deutsche Bank's Schneider believes another 0.2% annual contraction could be on the cards, but he too sees the prospect of a recovery in due course.
“The hope is that starting from the spring, as the real incomes of families increase above all, inflation continues to fall and perhaps even optimism grows a little, we can get out of this crisis,” he said.
“Private consumption is likely to save us from a significant economic downturn.” In contrast, a more optimistic economist is Stefan Muetze of Helaba, who believes that the combination of a recovery in consumer spending, industrial demand and investment in the green transition could lead to growth above 1% in 2024.
read also Germany, bad news from inflation (also for Europe).
What's about to happen? What happened to the German locomotive? As recalled by Jon Henley in The Guardian, the famous German economic model has noticeably faltered in 2023.
In part, the correspondent suggested, the problems are circumstantial and therefore, hopefully, temporary: a weaker Chinese economy, for example, and the impact of Russia's war against Ukraine.
Demand for goods produced primarily by the German export sector – machinery, cars, tools, chemicals – fluctuates depending on the state of the economy as a whole.
However, the current recession has also highlighted long-term problems affecting Germany's economic efficiency.
Economists have highlighted the country's rapidly aging population, lack of major investment in infrastructure and high corporate tax rates as reasons for concern.
Longer-term threats include Chinese competition in the electric car market and the cost of reaching net zero in emissions, highest in Germany due to its huge energy-intensive industrial base and rejection of nuclear power.
read also Germany's economy is a bomb ready to explode And at a time when China's BYD Co.
has even surpassed Tesla as the world's largest producer of electric vehicles, the German VDA automotive lobby has declared that car production is last year it was still 12% below the 2019 level.
The head of the German digital industries association, Bitkom, called the country a “failed state” in terms of digital government services.
Building permits, operating licenses and company registrations all take much longer to process than the EU average.
All of this has a structural impact on productivity, as does an administration often criticized as overly slow, overly legalistic, unnecessarily cautious and in need of far-reaching reforms.
It should also be remembered that the Government suffered a further blow at the end of last year, when the Constitutional Court ruled that its budget for 2024 violated the fiscal rules enshrined in the constitution, triggering a multi-billion dollar budget crisis.
The decision meant Scholz's cabinet was unable to divert 60 billion euros of loans remaining from his pandemic emergency fund into a climate and transformation fund (KTF) intended to fuel Germany's green transition and to modernize the industry.
Putting together a budget without that money will be difficult, The Guardian's analysis recalled.
The Greens are reluctant to compromise on the environment and social spending, the FDP refuses to eliminate the constitutional debt brake and wants big budget cuts, and the SPD is stuck in the middle.
With these premises, 2024 could still be very complex for Germany.