Gross domestic product down 0.3% in 2023 (2024)

Press release No. 019 of 15 January 2024

WIESBADEN – According to first calculations of the Federal Statistical Office (Destatis), the price adjusted gross domestic product (GDP) was 0.3% lower in 2023 than in the previous year. After adjustment for calendar effects, the decline in economic performance amounted to 0.1%. "Overall economic development faltered in Germany in 2023 in an environment that continues to be marked by multiple crises", said Ruth Brand at the Berlin press conference on Germany's 2023 gross domestic product. "Despite recent price declines, prices remained high at all stages in the economic process and put a damper on economic growth. Unfavourable financing conditions due to rising interest rates and weaker domestic and foreign demand also took their toll. Therefore, the German economy did not continue its recovery from the sharp economic slump experienced in the pandemic year of 2020", Brand went on to say. GDP is 0.7% higher in 2023 than in 2019, the year before the Covid-19 pandemic hit.

Gross value added of industry declined, most service branches helped the economy

In 2023, the development of gross value added was very mixed in the individual sectors of economic activity. Overall, economic performance in industry (excluding construction) declined considerably, contracting by 2.0%. This was primarily attributable to much lower production in the energy supply sector. Manufacturing, which accounts for almost 85% of industry (excluding construction), was also in negative territory in 2023 (‑0.4%), after adjustment for price effects. Positive contributions in this sector mainly came from the automotive industry and the manufacture of other transport equipment. By contrast, production and value added fell again in energy-intensive industrial branches, such as the chemical and metal industry, after economic performance in these sectors had already reacted very strongly to rising energy prices in 2022.

In the construction industry, deteriorating financing conditions had a particularly noticeable impact on development, alongside persistently high building costs and a skilled labour shortage. This affected the construction of buildings in particular. By contrast, production in civil engineering and building completion work increased. Overall, the construction industry saw modest growth of 0.2% in 2023, after adjustment for price variations.

Most service branches were again able to expand their economic activities compared with the previous year and helped the economy in 2023. However, their overall growth was weaker than in the two preceding years. The information and communication branch reported the largest price adjusted increase (+2.6%). It therefore continued on its long-term growth path, which was only hampered by a slowdown in 2020, the first year of the pandemic. Public services, education, health (+1.0%) and business services (+0.3%) also registered a slight increase. By contrast, price adjusted gross value added in the aggregated economic sector of trade, transport, accommodation and food services declined (-1.0%). This development was largely attributable to wholesale and retail trade, which contracted significantly, while motor trade and the transport sector expanded. Total price adjusted gross value added decreased slightly (-0.1%) in 2023.

Household and government final consumption expenditure declined, positive signals from gross fixed capital formation in machinery and equipment

Household consumption in 2023 was down a price adjusted 0.8% on the previous year, edging away again from the pre-crisis level of 2019 (-1.5%). High consumer prices are likely to be the main reason for this development. Expenditure declines mainly affected areas where prices in 2023 had remained at the high level of the previous year or had even increased further. Price adjusted expenditure on durable goods, such as furnishings and household appliances, registered a particularly sharp decline (-6.2%). General government also reduced its price adjusted consumption expenditure in 2023(-1.7%) for the first time in almost 20 years. This was primarily due to the discontinuation of state-financed Covid-19 measures, such as vaccinations and compensation paid to hospitals for free beds. With such measures, government consumption expenditure had helped bolster economic performance in the years from 2020 onwards.

Gross fixed capital formation in construction declined a price adjusted 2.1% in 2023. In addition to high construction prices, this sector was also affected by the marked increase in interest rates in construction, which put a particular damper on housing construction. Positive signals only came from building completion work, which was likely due, in part, to the high demand for energy retrofitting. By contrast, gross fixed capital formation in machinery and equipment increased considerably in 2023 on the previous year (+3.0%), after adjustment for price effects. This was mainly attributable to the increase in commercial new registrations of passenger cars, which was buoyed by the eco-bonus for electric company cars that applied until August 2023.

The subdued pace of growth of the global economy and weak domestic demand in 2023 also impacted foreign trade, which declined despite falling prices, with imports experiencing a greater contraction (-3.0%, priced adjusted) than exports(-1.8%, price adjusted). This produced a positive balance of exports and imports, which supported the GDP.

Labour market remained robust

In 2023, the economic performance was achieved by an average of 45.9 million persons in employment whose place of employment was in Germany. This was an increase of 0.7%, or 333,000 persons, on a year earlier - more than ever before in Germany. The immigration of foreign workers was one of the reasons why employment rose in 2023. In addition, there was an increasing labour force participation of the domestic population. These positive effects more than offset the dampening effects of demographic change. The employment growth seen in 2023 was almost entirely attributable to the service branches.

General government reduced financial deficit once more, despite further measures taken by the state

General government budgets recorded a financial deficit (net borrowing) of 82.7 billion euros at the end of 2023, according to provisional calculations. This was a decrease of roughly 14 billion euros from 2022 (96.9 billion euros). Central government, in particular, managed to reduce its financial deficit substantially compared with the previous year. Expenditure had risen considerably in 2022 as a consequence of the Federal Government's relief packages to reduce the impact of the energy crisis and stabilise the economy. Although substantial payments also had to be made in 2023 to finance the brake on gas and electricity prices, not much had to be spent to fight the Covid-19 pandemic, for instance on tests and vaccines. In addition, there was a decline in central government transfers to state government and social security funds, whose financial balances deteriorated as a consequence. The ongoing financial burden as a result of the high number of refugees was reflected especially by the increased expenditure of local government, which recorded a deficit at the end of 2023, as did central and state government. Measured as a percentage of GDP at current prices, the deficit ratio of general government was 2.0% in 2023 and therefore substantially lower than in the three preceding years. It is also below the 3% reference value of the European Stability and Growth Pact, which was however suspended until the end of 2023.

GDP in 4^th quarter of 2023 down on previous quarter according to results available

The current GDP result for 2023 contains a first, very early estimate for the 4^th quarter of 2023. As the data basis of this estimate is less complete than that of the regular quarterly calculation, there is a higher degree of uncertainty. The results for the first three quarters of 2023 were also reviewed. According to the information available so far, GDP in the 4^th quarter of 2023 fell by 0.3% on the previous quarter after adjustment for price, seasonal and calendar variations; GDP had stagnated in the 3^rd quarter.

The Federal Statistical Office will publish the regular first estimate for GDP in the 4^th quarter of 2023 on 30 January 2024. Detailed national accounting results will follow on 23 February 2024.

More information:

The statement for the press conference on Germany's 2023 gross domestic product, which contains additional results, is available on the press conference webpage.

More detailed results on the GDP for 2023 are contained in Fachserie 18 "National Accounts”, Series 1.1 “First Annual Results".

In 2024, national accounting results from 1991 onwards will be recalculated as part of the internationally harmonised major revision of 2024. The new time series are scheduled for release in August 2024.

Other publications on national accounts and a detailed quality report can be found on the "National Accounts, Domestic Product" theme page under "Publications".

The above and other current national accounting results are also provided in the GENESIS-Online database. Visualised updated results of national accounts are available in our interactive National Accounts Monitor for Germany at www.destatis.de/vgr-monitor-deutschland (only in German).

GDP data are also available on Dashboard Germany at www.dashboard-deutschland.de (only in German). This data portal of the Federal Statistical Office combines up-to-date indicators from official statistics producers and other data providers on the topics of the economy, finance, health and mobility. The portal also contains the Economic Pulse Monitor (only in German) tool for real-time economic monitoring.