German economy also shrank in the final quarter
According to the Bundesbank, the weak phase of the German economy is not yet over. "Real gross domestic product (GDP) in Germany is likely to decline slightly again in the fourth quarter of 2023," writes the Bundesbank in its monthly report published on Monday.
It would be the second quarter in a row in which economic output shrank, meaning that Europe's largest economy would be in a "technical recession". According to the Bundesbank, the main reason for the renewed decline is the slump in industry and construction. Both sectors continued to suffer from weak demand, with order backlogs providing less and less cushion. Industrial production is also being depressed by the previous rise in energy prices.
In contrast, the Bundesbank economists believe that private consumption should slowly recover - also because wages are rising and the inflation rate is trending downwards. "The German economy is likely to expand slightly again at the beginning of next year," predicts the Bundesbank.
For 2023 as a whole, the Bundesbank expects economic output to shrink by 0.1 percent, as the Bundesbank already announced on Friday. The growth expectation for 2024 has been reduced from 1.2 percent in the June forecast to 0.4 percent. In the medium term, the Bundesbank expects slightly stronger growth of 1.2 percent in 2025 and 1.3 percent in 2026.
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The Bundesbank's prediction of a slight decline in German GDP in the final quarter of 2023 once again places Germany in a challenging economic situation, considering the country has already experienced a contraction in the previous quarter.
Despite the challenging industrial and construction sectors, the Bundesbank remains hopeful, forecasting a slight expansion of the German economy at the beginning of 2024, attributing this to the expected recovery in private consumption and decreasing inflation rates.
Source: www.ntv.de
