as reported by the German statistical agency Destatis. Europe’s largest economy experienced a 0.2 percent decline compared to the previous year, marking the second year of economic contraction after a 0.3 percent decline in 2023.
Destatis attributes the economic downturn to several factors. Firstly, the high energy prices have significantly impacted Germany’s economy. Additionally, the agency highlights the increasing foreign competition in key export markets for Germany. Furthermore, the high interest rates are considered another contributing factor.
Germany, the Netherlands’ primary trading partner, has been grappling with economic challenges. Last year’s quarterly results prompted news agency Bloomberg to label the situation as a “mild recession.” A recession is defined as a two-quarter decline in gross domestic product (GDP), which encompasses all economic activity generated by citizens and companies.
Germany’s energy dependence on Russia has made it particularly vulnerable to the impact of higher energy costs since the onset of the Ukraine war. Moreover, the German car sector is facing challenges due to disappointing sales figures in China. This decline is attributed to the growing preference among Chinese consumers for Chinese car brands. As a result, Volkswagen, Germany’s largest car manufacturer, is considering the closure of factories within Germany to reduce costs.
While Germany holds the distinction of being the Netherlands’ most significant trading partner, the Dutch economy did manage to experience growth in 2024. In the third quarter of last year, the Dutch economy demonstrated a 0.8 percent increase compared to the preceding quarter.