The German economy experienced a slight contraction in the third quarter of 2023, but it was less severe than anticipated. Lower household consumption contributed to the decline. However, revised data from previous quarters revealed that the economy managed to avoid the recession previously reported last winter.
According to preliminary data released by Germany’s statistics office on Monday, the country’s gross domestic product (GDP) shrank by 0.1% in the July to September period, after adjusting for price, seasonal, and calendar variations. This reading surpassed economists’ expectations of a 0.2% contraction, as revealed in a poll conducted by The Wall Street Journal.
Additionally, there were upward revisions to GDP growth in the first and second quarters of the year. The economy expanded by 0.1% in the second quarter, marking a positive revision from previous data that indicated zero growth. In the first quarter, the initial contraction of 0.1% was revised to indicate stagnation. Consequently, Germany managed to avoid the recession previously reported.
Despite this positive development, the German economy still faces challenges on its path to sustained growth, primarily due to a sluggish manufacturing sector. According to forecasts published by the European Commission in September, Germany’s GDP is expected to shrink by 0.4% overall in 2023.