According to the Bundesbank, the German economy will not make big leaps in the current quarter. “In the third quarter, economic output could roughly stagnate,” writes the central bank in August in its monthly report.
However, this assessment is somewhat more confident than at the beginning of June. For the whole year, the Bundesbank now considers a slight plus of the gross domestic product (GDP) to be possible instead of stagnation. This would result in Europe’s largest economy just a third year without growth.
“Improved starting ramp” for 2025
According to revised figures from the Federal Statistical Office, the German economy has grown slightly in the final quarter of 2024 instead of shrunk. This results in an “improved starting ramp” for the current year, explained the Bundesbank economists. “The unexpectedly favorable development of mood indicators also speaks for a slightly better assessment for the third quarter.”
Customs dispute continues to ensure uncertainty
Nevertheless, even after the fundamental dispute in the trade dispute between the USA and the European Union, the uncertainty “in the face of open questions and the leaked US economic policy” remains high. The burden on exports “Made in Germany” to the USA will increase in any case.
Overall, according to the Bundesbank, the Bundesbank assessed the domestic industry “no growth impulses in the third quarter”. No strong boost is also expected from the construction industry, although there is a recovery tendency to be recognized there when the order is received. The subdued prospects on the labor market also brake private consumption.
In the second quarter, economic growth in Germany shrank for the previous quarter of the Federal Statistical Office by 0.1 percent. This Friday, the Wiesbaden authority will inform more about economic development in spring.