The slump in consumption and the weakening global economy slowed down the German economy in the summer. The gross domestic product (GDP) fell by 0.1 percent in the third quarter compared to the previous quarter after price, season and calendar adjustments, as the Federal Statistical Office announced on Friday in Wiesbaden. The authority thus confirmed an initial estimate.
Inflation, which continues to be comparatively high, is putting a strain on consumers. They can afford less for their money. Many people are limiting their consumer spending. The annual inflation rate was 3.8 percent in October after 4.5 percent in September and 6.1 percent in August. Food prices also rose above average in October.
Headwind for the German economy
In addition, the German export industry is feeling the effects of the weakness of the global economy. Exports failed as a growth engine in the summer. A total of 0.8 percent fewer goods and services were exported than in the second quarter of 2023. The headwind also comes from increased interest rates. These are depressing demand for construction services, among other things. According to the information, positive impulses for the economy came from companies’ investments in equipment, for example in vehicles and machines.
According to the Bundesbank’s assessment, it will be difficult for the German economy to emerge from the weak phase that has lasted since the beginning of the Russian war of aggression on Ukraine. Economic output is likely to fall slightly again in the fourth quarter of the current year. Economists and the federal government expect that Europe’s largest economy will continue to shrink in 2023 as a whole before things start to pick up again in 2024.
Gross domestic product (GDP) shows how well or poorly a country’s economy is developing. Everything that is produced within a certain period of time is included. In addition, the value of services and the spending of consumers as well as investments by companies – for example in machines – are included. All economic sectors are taken into account. The largest item is private consumption. Another component is the so-called external contribution – the difference between what companies sell abroad (exports) and buy from there (imports). (dpa)