Germany’s economy contracted slightly in the third quarter

A double-decker bus drives past the skyline with its dominant financial district in Frankfurt, November 8, 2023. REUTERS/Kai Pfaffenbach/File Photo Acquire License Rights

BERLIN, Nov 24 (Reuters) – Germany’s economy contracted slightly in the third quarter compared with the previous three months, data from the statistics office showed on Friday.

The figure confirmed an initial estimate published in late October that Europe’s largest economy would shrink by 0.1%.

“After the weak economic development in the first half of 2023, the German economy started the second half of the year with a slight decline in performance,” said Ruth Brand, President of the Statistics Office.

Germany has been among Europe’s weakest economies this year as high energy costs, weak global orders and higher interest rates took their toll.

In the second quarter, the German economy grew by 0.1% after stagnating in the first three months of the year.

Adjusted gross domestic product (GDP) shrank 0.4% year-on-year in the third quarter.

Private consumer spending, which accounts for around two thirds of GDP, was 0.3 percent lower than in the previous quarter, the statistics office said. Government consumer spending rose 0.2% for the first time in more than a year, it said.

A court ruling that blocked the transfer of unused pandemic funds into green investments and ripped a 60 billion euro ($65.44 billion) hole in the state budget has led to great uncertainty about planned investments, particularly in industry .

“Government austerity measures could lead to additional dampening of growth,” said VP Bank chief economist Thomas Gitzel, adding: “It is unlikely that private consumption or investments will suddenly pick up.”

The Bundesbank said in its monthly economic report on Monday that the German economy is expected to shrink again in the fourth quarter and show signs of a slight recovery early next year.

($1 = 0.9168 euros)

Reporting by Miranda Murray; Editing by Linda Pasquini and Jamie Freed

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