Martin Meissner/AP
German households spent less in the third quarter, weighing on economic growth.
London
CNN
—
Germany’s production fell slightly in the third quarter, official data showed on Monday, raising the risk of a major disaster. recession in Europe’s largest economy.
According to the announcement, gross domestic product (GDP) decreased by 0.1% (increased by 0.1%) in the July-September period compared to the previous quarter. German Federal Statistical Office (Destatis).
The decline was driven by a decline in consumer spending.On the other hand, investment Mr. Destatis said that investments in machinery and equipment by businesses made a positive contribution to GDP.
This data bodes ill for the entire region that uses the euro. Because Germany is the largest of the 20 economic powers.
“The German economy is once again teetering on the brink of a technical recession,” said Klaus Wistesen, chief eurozone economist at Pantheon Macroeconomics. A technological recession is defined as a decline in production for two consecutive quarters.
Germany’s economy has been in recession for almost a year. GDP contracted in the last three months of 2022 and stagnated in the first quarter of this year, according to revised data from Destatis. (Initial estimates by the Bureau of Statistics indicate that Production volume has declined for two consecutive quarters. )
Economists say the situation is unlikely to improve soon as China’s vast manufacturing sector grapples with weak Chinese demand. High energy costs and painful interest rate increases. Companies in the industry are cutting jobs at the fastest pace in three years as new orders fall and confidence remains “very negative,” it said. survey data The October edition was released last week.
“The German economy is currently stuck in a quagmire,” Bystesen said, adding that it was doubtful whether the economy would recover in the fourth quarter. “Risks are tilted to the downside towards the beginning of 2024,” he added.
There was good news on inflation. Consumer prices rose by an average of 3% in October from a year earlier, according to the first estimates released by Destatis on Monday. This was a significant deceleration from September’s 4.3%.
a Energy prices have fallen from very high levels over the past year Destatis said inflation slowed this month as a result of last fall.
Germany’s economy may have been particularly hard hit, but business activity elsewhere in the eurozone has been lackluster, with economists saying a period of stagnation or even a mild recession is imminent in the region. I believe.
A recent survey of manufacturing and services companies in the euro area suggested that production fell sharply in October. The outlook for demand for goods and services also worsened.
Last week, the European Central Bank kept interest rates on hold as the eurozone plunged, breaking the spell of 10 consecutive interest rate hikes. September inflation etc. Evidence of financial weakness. ECB President Christine Lagarde warned that risks to growth “remain tilted to the downside” and said the Israel-Hamas war meant the outlook for energy prices was “difficult to predict”.
Still, third-quarter GDP figures for the eurozone are “mixed so far,” said Bart Collein, senior eurozone economist at Dutch bank ING.he pointed out While Germany and Austria shrunk, Belgium and Spain grew strongly. “Thus, it is likely that euro area gross domestic product (GDP) did not contract in the third quarter, but a slight decline in the fourth quarter is a realistic prospect,” he said in a note. said.
Eurozone GDP statistics are due to be released on Tuesday.
