Revised Figures Show German Economy Shrank By 0.2% In Q4 2024
...As Deutsche Bank Reports Drop In Profit
The German economy shrank more than expected in the fourth quarter (Q4) of 2024, as Gross Domestic Product (GDP) dipped by 0.2 percent as shown by final figures released by the Federal Statistical Office.
A report by The German News Service (delivered by dpa) indicates that the figures were a downward revision of the 0.1 percentage points from initial figures released by the agency earlier in January.
While spending by private consumers and the government both rose, exports were significantly lower than in the previous quarter, according to the Statistical Office.
Germany’s economy, the largest in Europe, has shrunk for two years in a row, the worst stretch of stagnation for Germany in more than two decades. The last time Germany’s economy recorded two consecutive years of negative growth was in 2002 and 2003.
For the full year of 2024, German GDP also fell by 0.2 percent compared to the previous year.
Economists don’t expect a significant upturn anytime soon. The German government has lowered its growth forecast for 2025 to 0.3 percent, down from a previous forecast of 1.1 percent several months ago.
The Bundesbank and the German Council of Economic Experts are also only forecasting very modest growth of 0.2 percent and 0.4 percent just as the German government forecast a 1.1 percent growth in 2026.
MEANWHILE, Germany’s Deutsche Bank on Thursday reported profit before tax of €5.3 billion ($5.5 billion), down 7 percent year-on-year in light of the settlement of litigation issues related to its takeover of Postbank. The figure is below what analysts had expected.
The bank’s fourth-quarter profit attributable to shareholders plunged 92 percent to €106 million from last year’s €1.26 billion. Despite this, dividends are set to rise from €0.45 to €0.68 per share.
In addition, Deutsche Bank held out the prospect of a further share buyback of €750 million.
Chief Executive Officer Christian Sewing was confident that the bank would increase its return on tangible equity to more than 10 percent in 2025 as planned, despite the recent decline in profits. Last year, at 4.7 percent, it was not even half as high.
Revenues are expected to continue to grow from about €30 billion to around €32 billion in the current year.
Sewing said 2024 was “an important transitional year, which laid the foundation to take the next big step together from a position of strength.”
We have always said that 2025 will be decisive for us. At the end of this year, we will be judged by whether we have been successful with our transformation and growth strategy.
The key benchmark for this is our post-tax return on tangible equity (RoTE) and we are convinced that we will increase this to over 10 percent this year as planned. The very strong start to the year reinforces our confidence.”
