What are the chances of a German recession in 2024? Financial expert analyzes the current situation of German industry.

What are the chances of a German recession in 2024? Financial expert analyzes the current situation of German industry.

According to a report by www.tagesschau.de,

German industry is going through a difficult phase, which points to a possible recession in 2024. Industrial production fell by 0.7 percent in November 2023, which is the sixth consecutive decline. The long-term trend of industrial production in Germany has been falling since 2018. Economists fear that Germany will see another decline in gross domestic product in the fourth quarter of 2023, pointing to a possible technical recession.

The impact on the market and the financial industry could be drastic. According to Commerzbank chief economist Jörg Krämer, current data suggests that German economic output will shrink by 0.3 percent in the new year. Other experts and economists also expect a poor starting point for the 2024 financial year. The falling incoming orders and the decline in the truck toll mileage index signal that the industry will also face major challenges in 2024. Added to this are problems in retail and weak private consumption.

The deteriorating economic prospects for Germany's economy are an important pointer towards the European Central Bank (ECB). The pressure is increasing to quickly initiate a turnaround in interest rates in the new year in order to give the economy some breathing room again. A combination of high inflation, interest rates and a weak global economy creates a “poisonous cocktail” and poses major challenges for the economy.

These developments could have a negative impact on the financial sector as companies face higher financing costs and lower investments. The ECB will therefore be crucial in stabilizing the economy in Germany and the Eurozone and getting it on track.