Bloomberg experts acknowledge that Germany’s economy has weakened across all sectors. So, it urgently needs stimulus measures.

Analysts' fears of a recession in Germany have proven to be justified. Concerns have intensified after yet another downgrade in the country’s business outlook.

Leading experts do not anticipate a swift recovery for Europe’s largest economy. This pessimism is confirmed in recent surveys. The Ifo Institute’s economic expectations index dropped to 86.3 points in September from the previous 86.8 points. It is the lowest level since February 2024. According to Ifo President Clemens Fuest, the Achilles' heel of the German economy is its manufacturing issues.
Malaise is evident across the board—in mechanical engineering, the chemical and automotive industries, as well as in electrical equipment.

The current situation has been exacerbated by troubles in Germany’s service sector. Bloomberg reports that an economic downturn in Germany was confirmed after a serious decline in the automotive sector, which is a key industry for the country. Bundesbank analysts reckon that an economic slump is unlikely, though they do not rule out that the economy may have slipped into a recession. As a result, the German economy is expected to face another contraction in the third quarter of 2024.

Amid such fundamentals, economists have to downgrade their forecasts for the current year. However, not everyone is pessimistic. Some analysts expect only a slight decline. Earlier, Clemens Fuest warned of the risks of "negative growth." Nevertheless, the country maintains relative economic stability. However, the rise in disposable income has not yet translated into consumption. In such a situation, an increase in the savings rate indicates that citizens are worried about the future.

Earlier, Robin Winkler, head of the economic department of Deutsche Bank's research division, stated that Germany’s industry is facing the most painful downturn since the formation of the republic in 1945.