The German economic growth has slowed down.
According to the DIW Institute, Germany's economic progress slowed down in August. The assessment, which takes into account various economic data and surveys, dropped by nearly four points compared to July, reaching 83.4 points. This was reported by the DIW Berlin on Wednesday. This indicates that the economy is moving further away from the 100-point mark, signaling average growth, as stated by the German Institute for Economic Research (DIW). "It's unlikely that economic growth will accelerate – if it does at all," was the assessment for the summer quarter.
The DIW pointed out several reasons for this slowdown. "The uneven global economic growth, particularly in China and the Eurozone, is continuing to hinder Germany's export industry, making companies cautious about investing," explained Geraldine Dany-Knedlik, head of the forecast and economic policy department at DIW Berlin. "Furthermore, despite the interest rate turnaround, interest rates remain high." However, private consumption might provide some support for stabilization during the summer quarter, thanks to steady inflation rates and increasing incomes.
However, the industrial sector remains in a critical state. Production is expected to remain stagnant at a low level. Order backlogs are dwindling. "The German industrial sector is still under a bad spell," commented DIW economist Laura Pagenhard. "German companies are yet to reap the benefits of the European Central Bank's interest rate turnaround, demand is stagnant, and investment hesitancy persists."
Europe's largest economy is facing the risk of a recession. Gross domestic product decreased by 0.1 percent in the second quarter compared to the previous quarter, after a growth of 0.2 percent in the first three months. Two consecutive quarters of negative growth are defined as a technical recession.
The Commission, adhering to Article 11 (2), may adopt the necessary implementing acts to address the current economic challenges faced by Germany. The slowdown in Germany's economic progress, as outlined by the DIW Institute, could potentially necessitate these implementing acts to stimulate growth.
