Germany’s Economy Shrank in 2024. Politicians Vow to Revive It.

Germany’s economic growth shrank for a second straight year in 2024, data released Wednesday showed. How to revive it has become a central issue as voters prepare to go to the polls next month to elect a new government.

The economy declined by 0.2 percent in 2024, after a similarly slight contraction the year before. Manufacturing of automobiles and machinery fell sharply, as increased competition, especially from China, and flagging demand in Europe led to a 3 percent drop in output compared with the previous year. Construction fared even worse, falling 3.8 percent compared with 2023.

The German economy, which is Europe’s largest, has been weighed down by high interest rates and energy costs, along with persistent political uncertainty that culminated in the collapse of Chancellor Olaf Scholz’s government in November.

The country is expected to post slow growth in 2025, and more than a third of voters named the economy as Germany’s most important problem, the latest polling showed.

“Even if the risk of too much complacency even after two years of stagnation remains, the hope is that any new German government would decide on a longer-term plan for economic reforms and investments,” Carsten Brzeski, an economist with ING Bank, wrote in a note.

Plans about how to return to growth dominate the agenda of every political party as the campaign for the Feb. 23 election heats up.