DNB flags growing concerns about Germany sliding back into recession

02 Nov '24

2 min read

DNB flags growing concerns about Germany sliding back into recession

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There are growing concerns that Germany will slide back into recession, creating an uncertain outlook for the European economy going into 2025, the DNB Global Economy Outlook said.
German GDP shrank in Q2 over Q1's, but GDPs of Spain, France and Italy grew.
Eurozone inflation should fall towards target in 2025-26 and enable the ECB to cut once more this year if wage pressures remain contained.

There are growing concerns that Germany will slide back into recession, creating an uncertain outlook for the European economy and regional politics going into 2025, according to Dun & Bradstreet (DNB) Global Economy Outlook October 2024.

German gross domestic product (GDP) shrank in Q2 2024 compared with Q1, but GDPs of Spain, France and Italy expanded.

The Eurozone economy continued its recovery in the second quarter (Q2) this year, with mixed performances across the region, DNB noted.

Inflation should decline towards target in 2025-26 and enable the European Central Bank (ECB) to cut once more this year if wage pressures remain contained, DNB noted.

The UK economy began Q3 2024 on a sluggish note with zero GDP growth in July, matching the previous month. Declining output in production industries and the construction sector has offset the small uptick in the services and agriculture sectors.

The UK economy has likely slowed in the second half (H2) this year so far, following a strong start to the year. Wage growth and services inflation remain relatively strong, providing something of a brake to the decline of headline consumer prices.

However, headline prices are still falling, which will likely mean that the Bank of England (BoE) will consider further interest rate cuts this year and across 2025.

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