The risk of recession in Germany is above average compared to other countries. Only the war-torn Ukraine and Liechtenstein are worse off in Europe.
With a probability of 38 percent, Germany is in the top group of countries with the highest risk of recession across Europe. This is shown by a survey published today by the ifo Institute and the Institute for Swiss Economic Policy. Only Ukraine (41 percent) and Liechtenstein (50 percent) have a higher risk of their economies contracting for two quarters in a row. More than 1,000 economic experts from over 100 countries were surveyed.
Big differences between states
Most of Germany’s neighbors, such as France (23 percent) or Italy (27 percent), have a significantly lower risk of recession. In a European comparison, the experts estimate the risk of recession to be lowest in North Macedonia (eight percent). Greece and Switzerland also have values below 20 percent.
Overall, there is a wide range of economic prospects for individual countries. On average, the experts were rather optimistic that their countries could avoid a recession, according to the ifo researchers.
War and energy crisis are decisive
A technical recession is a decline in gross domestic product in two consecutive quarters. The German economy shrank by 0.3 percent in the fourth quarter of 2023. According to the survey, the main reasons for Germany’s negative outlook were geopolitical events and energy prices.
Globally, experts saw a high probability of recession in Israel (44 percent), Ecuador (48 percent) and Argentina (61 percent), among others. The global average was 26 percent.
The Bundesbank assumes that the economy in Germany will “stagnate at best”. The economists at the Organization for Economic Cooperation and Development, OECD, however, expect the German economy to grow by 0.3 percent this year. As recently as November last year, experts had assumed that the German economy would grow by 0.6 percent in 2024.