Germany, Europe’s largest economy, is expected to enter a technical recession in the third quarter, with a second consecutive quarterly decline in its gross domestic product (GDP), the Ministry of the Economy said on Monday.
“The federal government expects a further slight decline (…) in the third quarter, which, after the slight decline in the second quarter, could correspond to the definition of a ‘technical recession'”, according to a press release from the ministry .
The phase of economic weakness “is likely to continue in the second half of 2024, before the growth dynamic begins to gradually accelerate next year,” adds the ministry.
The first estimate of GDP for the third quarter will be communicated on October 30.
A further decline would be in line with Berlin’s recent lowering of its growth forecasts for the year. The government now anticipates a contraction of 0.2% in annual GDP instead of an increase of 0.3% planned for the spring.
The GDP of Europe’s largest economy had already contracted by 0.3% in 2023. This would therefore make two years in a row of recession for the country.
The German economy, which has long benefited from cheap energy thanks to Russian gas delivery agreements and dynamic exports, particularly to China, continues to bear the brunt of the effects of the war in Ukraine and the weakness of global demand, fueled by protectionist tendencies in China and the United States, its major partners.
Over the months of June to August, manufacturing production fell by 1.3% and orders fell by 5.8% in August, which does not indicate a future rebound.
Another sign of the prevailing slump, car registrations are in sharp decline and consumers are restricting their spending, fearing more for their jobs, in a context of rising unemployment rates and business bankruptcies.
After two consecutive years of decline, German GDP should however grow again next year, by 1.1%, then by 1.6% in 2026, according to new government forecasts, which are however already considered too optimistic by several institutes. of the country’s economic situation.
This article was automatically published. Sources: ats / awp / afp
