German Economy Anticipated to Face Stagnation Once More in 3rd Quarter

22 Aug, 2023

German Economy Anticipated to Face Stagnation Once More in 3rd Quarter

Anticipating a recurring pattern of stagnation, Germany's central bank foresees little change in the nation's economy, the largest in Europe, during the ongoing quarter. This adds to a series of lackluster performances.

The second quarter saw German gross domestic product remain stagnant, following contractions in the preceding two quarters. The nation grappled with elevated energy prices, escalating borrowing expenses, and vulnerabilities in its pivotal trading partner, China.

Despite lackluster global economic growth due to mounting interest rates and the specter of increasing inflation, the International Monetary Fund projected last month that Germany would be the sole major economy to contract this year.

In its monthly report released on Monday, the Bundesbank, Germany's central bank, painted a pessimistic picture. It indicated that the economic landscape was unlikely to brighten in the near future. The report suggests that there will likely be minimal alteration in the German economic output once again in the third quarter of 2023.

The bank elaborated that although personal expenditures are predicted to rebound due to consistent employment, notable wage hikes, and diminishing inflation, the industrial sector is expected to remain feeble due to waning foreign demand. Additionally, the burden of high funding costs is anticipated to persist, hampering investment.