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Data confirmed estimates that German GDP would shrink 0.1%

Germany’s economy shrank slightly in the third quarter compared with the previous three months, statistics office data showed on Friday.

The numbers confirmed an initial estimate,   published at the end of October, which indicated that Europe’s largest economy had shrunk by 0.1%.

(GRAPHIC FROM THE FIRST QUARTER OF 2021 TO THE SECOND QUARTER OF 2023)

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“After weak economic development   observed in the first half of 2023 , the German economy started the second half of the year with a slight drop in performance,” said Ruth Brand, president of the statistics office.

Germany has been among Europe’s weakest economies this year as   high energy costs , weak global orders and   higher interest rates   have affected the country.

In the second quarter , Germany’s economy grew by 0.1%, after having   stagnant   in the first three months of the year.

Adjusted Gross Domestic Product (GDP) contracted 0.4% year-on-year in the third quarter.

Private consumer spending, which accounts for about two-thirds of GDP, was 0.3% lower than in the previous quarter, the statistics office said. Government spending on consumption rose 0.2% for the first time in more than a year, he added.

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A court ruling that blocked the transfer of unused pandemic funds to green investment opened a €60 billion hole in the government budget, leading to great uncertainty over planned investments.

“Government austerity measures could lead to a further weakening of growth,” said VP Bank chief economist Thomas Gitzel, adding that “private consumption or investment is unlikely to suddenly increase.”

The German central bank said in its monthly economic report on Monday that the German economy will likely shrink again in the fourth quarter and show signs of slight improvement early next year.

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