February 29, 2024
The German economy ended 2023 in negative territory, according to the President of the Federal Statistical Office (Destatis). For Q4 2023, Germany’s economy experienced a 0.3% 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% in Q4 2023. After the adjustment for price and calendar variations, a reduced fall of 0.2% was registered as there was one working day less than a year ago.
The slight recovery of household final consumption expenditure in Q4 2023 (up by 0.2% compared to the previous quarter) was driven by increased demand for services. Government final consumption expenditure also increased slightly (up by 0.3% compared to the previous quarter). However, capital formation declined significantly, with fixed capital formation in construction down 1.7% after price, seasonal and calendar adjustment and gross fixed capital formation in machinery and equipment down 3.5%. Exports of goods and services fell 1.6% in Q4 2023, while imports declined by 1.7%. 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% compared to the previous quarter, with the largest falls in construction (-2.6%) and manufacturing (-1.4%). 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%. Business services and public services, education and health sector both saw slight increases in Q4 2023.
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