Germany’s economy left recession in the second quarter. “Probably” re-contract between July and September As warned, foreign demand, domestic consumption and investment are weakening due to the impact of rising financial costs Bundesbank In the latest edition of their monthly newsletter.
“Real gross domestic product (GDP) may contract somewhat in the third quarter of 2023,” the German central bank predicted, attributing the decline in activity to weak foreign demand for industrial products. The impact of rising financial costs, which reduced investment and reduced domestic demandEspecially in construction, but also in industry.
After two consecutive negative quarters followed by GDP declines in the last quarter of 2022 (-0.4%) and the first quarter of this year (-0.1%), Germany emerged from recession in the second quarter of 2023, when its activity stagnated. .
Thus, If the Bundesbank’s forecasts come true, the German economy will have contracted in three of the last four quarters and stagnated in one quarter.
According to Bundesbank economists, the existing order cushion helped to partially offset weakening industrial activity, along with a “particularly pronounced” decline in motor vehicle production.
Similarly they point out Rising financing costs and high construction costs have been dampening demand in the sector for some time, particularly in residential construction. The German economy received a positive boost from an even stronger labor market and the resulting strong wage increases.
However, they caution that weak real sales in the retail and hospitality sectors indicate that these additional funds are not being used to boost spending, but rather savings.
In this way, in recent months, The labor market “has a stabilizing effect” Although the Bundesbank warned that the outlook remained subdued in the German economy, sectors most exposed to economic shocks such as manufacturing, construction, logistics and trade.
On evolution inflammation In Germany, the Bundesbank highlighted that the inflation rate was 4.3% in September, up from 6.4% in August.
However, about 1.75 percentage points can be attributed to special effects that have now been eliminated and were previously favorable, including temporary measures implemented to cushion the impact of rising cost of living.
“In the coming months, the inflation rate should generally weaken somewhat,” Bundesbank experts add.
