German economy contracts by 0.3% in 2023: Destatis

The German economy has confirmed a 0.3% decline in its Gross Domestic Product (GDP) at the end of 2023, as reported by Destatis, the federal statistics agency of Germany. This contraction occurred in the fourth quarter of 2023 compared to the previous three months, when economic activity was already stagnant. Destatis President Ruth Brand highlighted that the decline in investment was one of the key factors that slowed down the German economy in the last quarter, while consumption experienced a slight increase. Despite this setback, Germany managed to maintain 46.2 million people employed by the end of 2023, marking an increase of 216,000 workers compared to the previous year. Regarding consumption expenditure, there was an increase in final consumption by German households, mainly driven by higher demand for services. However, capital formation decreased significantly, with declines in construction and investment in machinery and equipment. Exports of goods and services also experienced a decline in the last quarter of 2023, reflected in a 1.6% decrease. In contrast, imports decreased even further, with a 1.7% drop. Despite these negative figures, Destatis pointed out that some sectors managed to maintain growth in the fourth quarter of 2023, such as the real estate and housing sector, as well as business services providers. However, the manufacturing sector experienced a significant 2.2% decline. In terms of labor productivity, there was a decrease in both overall labor productivity and productivity per employed person. Nevertheless, employee compensation increased by 6% during the year, with an increase in average gross wages and salaries per employee. In summary, the economic outlook for Germany at the end of 2023 shows significant challenges, with a contraction in GDP and declines in investments and exports. However, the increase in employment and worker compensation stands out, suggesting some stability in the country's labor market.