{
  "title": "Drivers of Germany’s Growth Downturn",
  "publication": "IMF Working Papers, June 5, 2026",
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  "summary": "Germany’s economy experienced a pronounced recession during 2023–24, with real GDP contracting and growth falling notably behind the rest of the euro area. This paper systematically examines the underlying causes of this downturn using four complementary approaches.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Germany experienced a pronounced recession during 2023–24, with real GDP contracting and growth falling notably behind the rest of the euro area.\n- The paper uses four complementary approaches to systematically examine the underlying causes of the downturn."
    },
    {
      "heading": "Major quantitative finding",
      "content": "- About 60 percent of Germany’s growth underperformance was due to lower potential growth.\n- About 40 percent reflected cyclical factors."
    },
    {
      "heading": "Broad-based expenditure impacts",
      "content": "- Nearly all major expenditure categories weighed on activity, with particular weakness in:\n  - Investment\n  - Exports"
    },
    {
      "heading": "Production-side concentration",
      "content": "- The recession was concentrated in manufacturing and construction.\n- Manufacturing and construction together accounted for the bulk of the growth gap relative to the euro area."
    },
    {
      "heading": "Productivity and labor dynamics",
      "content": "- The decline in output was driven primarily by falling productivity, especially in industry and construction.\n- Reduction in hours worked was not the primary driver.\n- Falling productivity partly reflected cyclical labor hoarding amid weak aggregate demand."
    },
    {
      "heading": "Structural amplifiers of the downturn",
      "content": "- Structural challenges amplified the cyclical downturn, including:\n  - Longer-term subdued productivity growth due to structural factors such as persistent underinvestment in public infrastructure, skills, and innovation as well as excessive red tape.\n  - Population aging.\n  - One-off adverse effects from the 2022 energy-price shock.\n  - Deteriorating external competitiveness (although the level of the current account surplus remains substantial)."
    },
    {
      "heading": "Subject tags (from source)",
      "content": "- Economic sectors, Exports, International trade, Manufacturing, National accounts, Production, Productivity\n\nSource: \"Drivers of Germany’s Growth Downturn\", Harri Kemp, June 5, 2026, IMF Working Papers.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2026/06/05/drivers-of-germanys-growth-downturn-576616"
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    "Authors: Harri Kemp",
    "Published: June 5, 2026",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229050623.001",
    "Germany experienced a pronounced recession during 2023–24, with real GDP contracting and growth falling notably behind the rest of the euro area.",
    "The paper uses four complementary approaches to systematically examine the underlying causes of the downturn.",
    "About 60 percent of Germany’s growth underperformance was due to lower potential growth.",
    "About 40 percent reflected cyclical factors.",
    "Nearly all major expenditure categories weighed on activity, with particular weakness in:",
    "The recession was concentrated in manufacturing and construction.",
    "Manufacturing and construction together accounted for the bulk of the growth gap relative to the euro area.",
    "The decline in output was driven primarily by falling productivity, especially in industry and construction.",
    "Reduction in hours worked was not the primary driver.",
    "Falling productivity partly reflected cyclical labor hoarding amid weak aggregate demand.",
    "Structural challenges amplified the cyclical downturn, including:",
    "Economic sectors, Exports, International trade, Manufacturing, National accounts, Production, Productivity",
    "**Working Paper**"
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