The German economy contracted in the third quarter
The German Federal Statistics Office (Destatis) announced the final growth data for the German economy for the third quarter of the year.
Thus, Germany’s gross domestic product (GDP), adjusted for seasonal and calendar effects, decreased by 0.1 percent in the third quarter of the year compared to the previous quarter. Destatis thus confirmed the 0.1 percent contraction that it announced with preliminary data on October 30.
While the German economy, the largest in Europe and the fourth in the world, failed to grow in the first quarter of the year, in the second quarter of the year it grew by 0.1 percent.
Destatis President Ruth Brand said: “Following weak economic development in the first half of 2023, the German economy started the second half of the year with a slight decline in its performance.” he said.
The country’s GDP contracted 0.4 percent compared to the third quarter of last year. In quarterly terms, there was a negative contribution to GDP, especially from household consumption expenditure. While private spending decreased 0.3 percent in the third quarter compared to the previous quarter, public spending increased 0.2 percent.
An increase of 1.1 percent was observed in expenditures on machinery and equipment and 0.4 percent in investments in construction. In the same period, exports of goods and services decreased by 0.8 percent.
The German Central Bank (Bundesbank) expects the German economy to contract in the fourth quarter as weak external demand and the fallout from last year’s energy price shock slow production.
MAY ENTER INTO RECESSION
If the German economy contracts in the final quarter, it will fall into a technical recession and contract for two consecutive negative quarters.
On October 11, the government updated its growth expectation, which it had previously announced at 0.4 percent for this year, to -0.4 percent due to the stagnation of the global economy.
The International Monetary Fund (IMF) also reduced its growth expectation for Germany from -0.3 percent to -0.5 percent, stating that Germany would be the only developed country to contract this year. (AA)