The German economy failed to gain momentum in the summer, with the country's gross domestic product (GDP) shrinking slightly in the third quarter compared to the previous quarter.
Germany's Federal Statistical Office announced the 0.1% decline in an initial estimate this week. The estimate is adjusted for price, seasonal, and calendar effects.
Economists and the German government said recently that they expected Europe's largest economy to shrink for the year as a whole before picking up again in 2024.
According to the latest data, economic output grew slightly in the spring by a revised 0.1%.
But in the summer, private consumer spending in particular fell, according to the statisticians. There was, however, more positive news regarding companies' capital investments in equipment, for example in vehicles.
The inflation rate had fallen to 4.5% in September from 6.1% in August.
Headwinds are also coming from higher interest rates, which are depressing demand for construction services, for instance. At the same time, Germany's exporters are feeling the effects of the weakness of the global economy.
Leading German economic research institutes expect GDP to shrink by 0.6% in 2023 as a whole. In the spring the institutes were still forecasting slight growth, of 0.3%. The German economy is expected to grow by 1.3% next year, they said.
The German government's own forecast sees GDP declining by 0.4% in 2023. However, the Economy Minister Robert Habeck believes a recovery is on the way. "We have reached a bottom, we are leaving the valley and then it will go up again," the politician said recently.
GDP shows how well or badly a country's economy is growing. Everything that is produced in a certain period of time is included. It includes the value of services and consumer spending, as well as corporate investment - in machinery, for example. All economic sectors are taken into account, but the largest item is private consumption.
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