Gross domestic product in the eurozone’s largest economy declined 0.2 percent last year, according to preliminary figures from federal statistics agency Destatis, coming after a 0.3 percent contraction in 2023.

The German economy has faced a perfect storm, ranging from high energy costs battering its manufacturing sector to weak demand from China and other key export markets and deep-rooted structural problems like a shortage of skilled labour.

Destatis president Ruth Brand said the economy faced “cyclical and structural pressures” last year.

“These include increasing competition for the German export industry on key sales markets, high energy costs, an interest rate level that remains high, and an uncertain economic outlook,” she said.

Preliminary data also showed that the economy had contracted 0.1 percent in the final quarter of last year compared to the previous quarter.

Fears are growing that the economy will struggle to get back on its feet in the coming year, due in part to a political crisis at home.

Following the collapse of Chancellor Olaf Scholz’s coalition, Germany is heading for early polls on February 23, which is expected to be followed by a period of paralysis before a new coalition emerges.

Meanwhile US President-elect Donald Trump’s threat to hit imports into the world’s top economy with tariffs is adding to jitters for German exporters.

The data released Wednesday was in line with most forecasts, including from the government.

In December, the German central bank slashed its growth projection for 2025 to a meagre 0.2 percent from a previous estimate of 1.1 percent.