German economy shrinks in third quarter - financial experts surprised

German economy shrinks in third quarter - financial experts surprised

According to a report by www.zeit.de German economic output shrank in the third quarter. The adjusted gross domestic product (GDP) fell by 0.1 percent compared to the previous quarter. In the previous months there had been slight growth of 0.1 percent, after initial talk of stagnation. Some economists had expected a steeper decline, but were pleasantly surprised by the better result.

The federal government expects a decline in economic output of 0.4 percent for the entire year, while leading economic research institutes even expect a decline of 0.6 percent. This would make Germany the only industrial country without growth. However, Federal Economics Minister Robert Habeck (Greens) hopes that the low point has been reached and that there will be growth of 1.3 percent next year.

Consumer spending fell over the summer, largely due to high inflation causing many people to cut back on spending. Economists at Deutsche Bank expect private consumption to pick up slowly as consumer confidence remains subdued.

Another obstacle to growth is the increased interest rates, which limit demand for construction services and other areas. In addition, the German export industry is suffering from the weakness of the global economy.

The impact on the market and the financial sector will largely depend on the development of economic performance in the coming quarters. If the expected growth in 2024 actually materializes, this could lead to an increase in corporate investment, higher consumer consumption and generally positive sentiment in the financial sector. However, rising interest rates could hurt growth and dampen credit demand.

Overall, the situation remains uncertain as the effects of inflation and global economic development are not yet fully foreseeable. It is therefore difficult to make an accurate forecast about the long-term effects on the market and the financial sector. It remains to be hoped that the German economy has reached rock bottom and will recover in the coming years.