German economy shrinks in third quarter - first signs of an end to the downturn

German economy shrinks in third quarter - first signs of an end to the downturn

In the third quarter, the German economy shrank by 0.1 percent, as the Federal Statistical Office announced. In comparison, economists had even expected a decline of 0.3 percent. According to revised figures, the economy recorded slight growth of 0.1 percent in the spring, although there was initially talk of stagnation. High interest rates, rising prices and the sluggish global economy are having an inhibiting effect on the economy. However, there are initial positive signals that indicate a possible turnaround. The barometer for the Ifo business climate climbed in October for the first time in six months. This development could lead to GDP growing slightly again in the fourth quarter and increasing by around 0.2 percent compared to the summer quarter.

The federal government recently lowered its economic forecast for the full year 2023 and now expects gross domestic product to shrink by 0.4 percent. This would make Germany the only large industrial nation not to record any growth this year. Nevertheless, there are subtle positive signals that the situation is less bleak. According to chief economist Alexander Krüger from Hauck Aufhäuser Lamp Privatbank, the economic crisis is not over yet, but thanks to the upward revisions the situation looks somewhat better.

LBBW economist Jens-Oliver Niklasch is of the opinion that Germany's economy is more or less stagnating and is likely to be similar in the final quarter of 2023. Only then can you become a little more confident. KfW chief economist Fritzi Köhler-Geib, on the other hand, expects things to improve again next year thanks to falling inflation and rising incomes, especially through consumption. This is also expected by the government, which forecasts growth rates of 1.3 and 1.5 percent for 2024 and 2025. In 2022 it was still 1.8 percent.

According to a report by Süddeutsche.de