Germany’s Information Technology and Telecommunications (ITC) sector is set to significantly outperform the nation’s overall struggling economy in 2024. This prediction comes from a study conducted by the German digital association Bitkom. The sector is expected to witness a revenue increase of 4.4% to 224.3 billion euros ($245.09 billion). This marks a notable acceleration from the 2.0% growth observed last year.
Bitkom President Ralf Wintergerst highlighted the resilience of the tech sector. “Even under difficult economic conditions, characterised by geopolitical crises and budget cuts, sales and employment (within the sector) are increasing,” he stated. However, when compared internationally, Germany’s tech industry growth is slower. India is expected to see a 7.9% growth, the U.S. 6.3%, and China 5.7%.
Economic slowdown and policy challenges
In contrast, Germany’s overall economy is struggling. The International Monetary Fund (IMF) forecasts a mere 0.9% growth for the country in 2024. This rate falls significantly below the 1.4% average for advanced economies. Germany’s economy, the largest in Europe, was the weakest among its large euro zone peers last year. It suffered from high energy costs, decreased global orders, and record-high interest rates.
Adding to the economic woes, the government faced a major setback. In November, Germany’s top court rejected the 2024 budget plans, leading to a 17 billion euro ($18.6 billion) funding gap. This ruling sparked contentious political debates on how to manage the financial shortfall.
Calls for increased digitalization & investment
Wintergerst emphasized the need for more decisive investments in digitalization. “In order for Germany to catch up in terms of digitalization, companies and administrations need to ramp up their investments more decisively,” he urged. He called on the government to prioritize digitalization and economic growth in its policies.
The nation is also grappling with structural challenges, including workforce and infrastructure issues. The IMF predicts that Germany will be the only G7 country to have experienced economic shrinkage in 2023. With a projected growth of only 0.9% in 2024, it lags well behind the average growth rate for advanced economies. This situation is further exacerbated by domestic issues like farmer protests against diesel subsidy cuts and train driver strikes over wage disputes.
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