FRANKFURT: German output shrank slightly in the third quarter, official data published yesterday showed, as Europe’s largest economy continued to battle high interest rates, elevated energy costs and a manufacturing slowdown.
The economy contracted by 0.1 per cent quarter-on-quarter, federal statistics agency Destatis said in preliminary figures.
The performance was better than expected, with analysts surveyed by FactSet predicting a contraction of 0.2 per cent.
More surprisingly, Destatis said revised data showed the economy stagnated in the first quarter and did not shrink as
previously thought, meaning Germany dodged a technical recession of two consecutive quarters of contraction around the turn of the year.
The agency also updated its second-quarter figure, saying output grew by 0.1 per cent instead of showing zero growth as earlier data had suggested.
Germany’s performance so far this year has been “a little better than we had feared”, said LBBW economic Jens-Oliver Niklasch.
But it does not “change the overall picture”, he said. “Germany’s economy is more or less treading water.”
The German economy has faced severe headwinds since Russia’s invasion of Ukraine last year sent inflation, particularly the cost of energy, soaring.
The crisis has been compounded by a slowdown in the energy-hungry manufacturing sector, weakness in key trading partner China, and aggressive eurozone rate hikes aimed at taming runaway consumer prices.
The third-quarter contraction keeps Germany on track to end the year in a recession, in line with gloomy economic forecasts.
The German government said earlier this month it expected the economy to shrink by 0.4 this year, a sharp downgrade from previous forecasts. – AFP
