Instead of a downturn, there is an upswing: the German economy is growing in the third quarter. In view of the forecasts in the middle of the energy crisis, the development comes as a surprise, but according to experts the downward trend is only temporarily delayed.
The German economy grew surprisingly in the third quarter despite the energy crisis. The gross domestic product increased by 0.3 percent from July to September compared to the previous quarter, as the Federal Statistical Office announced in an initial estimate. Economists surveyed by the Reuters news agency had expected a decline of 0.2 percent.
After the slight increase of 0.1 percent in the second quarter, the German economy held its own despite difficult global economic conditions with the ongoing corona pandemic, disrupted supply chains, rising prices and the war in Ukraine, the Wiesbaden authority explained. The economic output was primarily supported by private consumer spending.
However, according to experts, growth is likely to be over for the time being in view of the energy crisis resulting from the Russian war against Ukraine. According to a forecast by the Munich Ifo Institute, the economy will shrink by 0.6 percent in the current fourth quarter. “The persistently high level of inflation and the uncertainty about the energy supply and its costs are having a significant impact on the German economy,” said the Bundesbank, which sees Germany on the “threshold of recession”. “Overall, economic output could drop significantly in the winter months.”
The economy faces severe headwinds. The high inflation of 10.0 percent recently is eating away at the purchasing power of consumers, who are therefore reluctant to spend. In industry, around two thirds of companies still complain about a lack of important raw materials and preliminary products, which is why they cannot produce as much as actually possible. Exporters are likely to feel the effects of the weaker global economy. In the construction industry, rising interest rates and high material costs are causing many projects to be canceled. The federal government assumes that the German economy will grow by 1.4 percent in the year that is coming to an end. For 2023, she expects gross domestic product to fall by 0.4 percent.
