Germany's economy shrank for the second straight year in 2024 as worried consumers held back on spending and Chinese competition ate into the country's traditional exports of cars and industrial machinery.

Germany’s economy, the largest in Europe, contracted for the second year in a row in 2024, official data showed Wednesday, underscoring the challenges facing the region as it tries to get economic growth back on track.

Friedrich Merz, the chancellor candidate for the conservative Christian Democratic Union, acknowledged the need for a “major effort” to revive the economy as his party pledges to return German growth to 2 percent over the next five years through changes to the welfare and tax systems.

Gross domestic product in the eurozone’s largest economy declined 0.2 percent last year, according to preliminary figures from federal statistics agency Destatis, coming after a 0.3 percent contraction in 2023.

Germany's Federal Statistical Office says the GDP contracted by 0.2 per cent in 2024 following a decline in 2023

Germany’s economy contracted for the second consecutive year in 2024 as cautious consumers curtailed spending even as competition from China eroded the country’s traditional export markets, particularly cars and industrial machinery. The development highlights the challenges the next government will face after the snap elections in February.

Germany’s economy contracted for a second straight year in 2024, underlining the scale of the challenge that will face a new government after elections due in February, including the possibility of fresh tariffs on its exports to the U.

Germany’s economy shrank for a second consecutive year in 2024 and is unlikely to grow much in 2025, laying bare the challenge for the country’s new government once snap elections are held in February.