Record sick leaves compound problems for ailing German economy: Bundesbank

The German economy could not hope for more than stagnation over the first three months of 2024, the Bundesbank has said, after a high sickness quota added to its ailments at the end of last year.

German GDP "probably fell" between October and December 2023 as "relatively high levels of sickness dampened economic activity, the German central bank said on Friday in its monthly report.

Meek consumption, falling orders for exports and confusion over the government budget, which had to be hastily redrafted following a shock court decision, were among the economy's other troubling symptoms, the Bundesbank said.

The poor performance capped a year in which the German economy was at the back of the pack among major advanced economies, shrinking by 0.3 percent.

"Record" levels of sick leave had weighed significantly on growth in 2023, according to a study published by the German VFA association of research-based pharma companies.

"Significant work absences led to considerable losses in production. Without above-average sick day numbers, the German economy would have grown by almost 0.5 percent (in 2023)," the study said.

Prognosis 2024

The prognosis to start the new year was not much better, according to the Bundesbank.

"All in all, German economic performance could at best stagnate in the first quarter of 2024," the central bank said.

A key survey published earlier this week showed that the mood among businesses was once again more pessimistic in January.

Germany's biggest economic pest, inflation, was however set to continue its steady descent.

Consumer prices rose 5.9 percent in 2023, while the rate of inflation sat at 3.7 percent in December.

"At the beginning of the new year, the inflation rate is likely to fall noticeably again," with the dissipation of base effects which had pushed the indicator back up at the end of 2023, the Bundesbank said.