Germany Joins Argentina as Only G-20 Member Facing GDP Drop

Germany faces the only contraction in any Group of 20 economy aside from Argentina this year, according to the OECD, which cut its outlook through 2024.

(Bloomberg) — Germany faces the only contraction in any Group of 20 economy aside from Argentina this year, according to the OECD, which cut its outlook through 2024.

The euro-zone country will suffer a 0.2% drop in gross domestic product in 2023 — down from a previous projection for stagnation, the Paris-based organization said in new forecasts published Tuesday. It will then grow only 0.9% in 2024, down from 1.3% anticipated in June.

The OECD’s 2023 projection is still marginally more optimistic for Europe’s biggest economy than other official forecasters such as the European Commission.

Germany’s own central bank predicts a 0.3% drop in output and this week warned that a range of deep-seated challenges to the country’s business model must be addressed to boost its longer-term prospects.

While the OECD cited Europe’s overall fragility and also downgraded Italy and the 20-nation euro area as a whole, but it highlighted Germany’s weakness in particular.

Germany’s economic challenges have been caused primarily by a combination of energy crisis following the withdrawal of Russian gas supplies, and a lack of demand from China.

–With assistance from William Horobin.

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