economic situation
Bundesbank: German economy will continue to weaken in autumn
The latest economic data has given some hope. But the future prospects for the economy are bleak. Consumers also have to prepare for rising inflation rates.
After the surprising mini-growth of the German economy in the summer, the Bundesbank is dampening expectations. The central bank writes in its November monthly report that it is difficult to derive an improved underlying economic dynamic from the increase in gross domestic product (GDP) in the third quarter. “The economic downturn in the German economy will probably continue in the fourth quarter.”
For the period from July to September 2024 inclusive, the Federal Statistical Office has calculated, based on preliminary data, an increase in German economic output of 0.2 percent compared to the previous quarter. After the wave of inflation has subsided and in view of rising wages, many consumers’ money is a little looser again, and higher government spending has saved Europe’s largest economy from a recession for the time being.
Difficult situation for the industry
According to the Bundesbank’s assessment, industry and construction will continue to dampen economic performance. “The still increased financing costs and the pronounced economic policy uncertainty continued to weigh on investments and thus the demand for construction services and capital goods.”
There are signs of a recovery in the export business, but demand for goods “Made in Germany” is still weak. The Bundesbank states that the industry is under great pressure to adapt to changing structural conditions at the domestic production site and on the global markets.
Rising inflation rate expected
According to the Bundesbank, people in Germany will have to prepare for higher consumer prices again next year: “A slightly higher inflation rate can be expected temporarily.” At the end of 2023, both energy prices and travel prices had fallen significantly – these dampening base effects are now no longer present. In October, the rate had already increased again to 2.0 percent after two months of falling values.
“At the beginning of the new year, special effects also have the effect of increasing prices,” explains the Bundesbank. These included the price increase for the Deutschlandticket and probably also significant increases in the tariffs for private health insurance. In addition, the significant wage growth from 2024 will keep inflation in services high.
dpa
Source: Stern
