Brandenburg Gate in Berlin, Germany

Germany GDP Q3 2022

Germany: Economy avoids contraction in Q3, but outlook remains bleak

The German economy surprised market analysts by avoiding a contraction in the third quarter. The economy expanded 0.3% quarter on quarter in the period, according to preliminary data. This was up from the 0.1% expansion logged in the second quarter. On an annual basis, the economy grew 1.1% in the third quarter, down from the second quarters 1.7% expansion.

While a detailed breakdown is scheduled for 25 November, data suggests that the headline print was mainly driven by household spending despite greater price pressures eating into consumers pockets.

Carsten Brzeski, global head of macro at ING, added:

“Looking ahead, the surprise growth in the third quarter does not mean that the recession narrative has changed. All leading indicators point to a further weakening of the economy in the fourth quarter and there doesnt seem to be any improvement in sight.” Even if the weather has brought some relief to the German economy, as the rainfall increased water levels and the warm October weather has postponed the start of the heating season, the gradual slide into recession continues. Companies and households are increasingly suffering under higher energy bills and ongoing high inflation, adjusting consumption and investments. The governments latest support package, if not implemented retroactively, will be too little too late to prevent a winter recession. It will only be able to soften such a recession.”

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