German central bank warns that economy remains 'listless'

Germany's economic weakness and stagnation will persist into the first months of the year, the country's central bank, the Bundesbank, stated in its monthly report for January.

"It is also unlikely that the German economy will manage to escape the prolonged period of stagnation in the first quarter of 2025," the Bundesbank said in the report, which was released on Wednesday.

According to preliminary calculations by the Federal Statistical Office, German economic output shrank by 0.2% last year.

This made 2024 the second year of recession in a row for Europe's largest economy. In an initial estimate for the final quarter of 2024, the statisticians assume that gross domestic product (GDP) fell by 0.1% compared to the previous quarter.

"The German economy remained listless in the fourth quarter of 2024," the report stated.

Industrial output in particular appeared to continue declining in the fourth quarter, as orders from abroad remained subdued, according to the Bundesbank.

Overall trends in demand for German industrial goods, however, appeared to stabilize somewhat at the end of the year, the central bank said.

Germany's construction industry remained mired in problems and is unlikely to boost growth.

Private consumption, on the other hand, should have recovered somewhat, but "households held back on spending despite sharply rising wages," the Bundesbank noted. "As a result, their saving rate rose while private consumption increased only slightly."

An uptick in inflation in Germany in December may have helped push down household spending, as consumer prices rose 2.6% compared to the same month last year, the second-highest monthly year-over-year inflation figure in 2024.