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Closed Christmas market: "German consumers are in the minor key"
Photo: via www.imago-images.de / imago images / Political-Moments
The German economy is entering a difficult autumn and winter with slightly weaker growth than initially assumed. The gross domestic product (GDP) rose in the third quarter by 1.7 percent compared to the previous quarter, as the Federal Statistical Office announced. In a first estimate, the Wiesbaden authority assumed an increase of 1.8 percent. Compared to the fourth quarter of 2019, i.e. the level before the corona crisis, economic output was 1.1 percent lower.
Europe's largest economy was boosted by private consumption, which rose strongly by 6.2 percent.
The export of goods and services, however, shrank by 1.0 percent compared to the previous quarter.
Corporate investments in equipment such as machines and vehicles fell by 3.7 percent, while construction investments fell by 2.3 percent.
The industry suffers from supply bottlenecks, raw materials and intermediate products such as semiconductors are scarce and expensive.
Some companies have to throttle production, orders can no longer be processed so quickly.
The mood in the German economy therefore deteriorated further in November.
The Ifo business climate index fell for the fifth month in a row.
"Delivery bottlenecks and the fourth corona wave are causing problems for companies," commented Ifo President Clemens Fuest.
Economists expect the economy to cool down significantly in the coming months, also due to the worsening of the corona infection situation, which is likely to dampen private consumption as an important pillar of the economy.
It is feared that consumers will refrain from going to restaurants or events for fear of infection.
In addition, numerous federal states have started to introduce stricter corona restrictions.
According to the Deutsche Bundesbank, the economic recovery should "take a breather first".
The gross domestic product could stand still in the fourth quarter, wrote the central bank in its current monthly report.
Sebastian Dullien, head of the union-related Institute for Macroeconomics and Business Cycle Research (IMK), was also pessimistic.
"The new wave of infections and new contact restrictions will dampen consumption, and we could even see a minus here." The hope is that the industry will develop a little better because the situation with the intermediate products is gradually easing.
"We currently expect the economy to stagnate around the end of the year."
Spending money becomes more difficult
"German consumers vote in a minor key," said Jörg Zeuner, Union Investment's chief economist, referring to GfK consumer confidence in November. "The pandemic situation and the current inflationary environment are unsettling consumers and dampening consumer confidence." Even those who want to spend money cannot do so easily. "Because the delivery bottlenecks are putting a strain on the supply and the containment measures keep some people away from the shops."
Thomas Gitzel was nostalgic in view of the deteriorating outlook.
"How beautiful the summer was!" Said the chief economist at VP Bank.
"The third quarter, which was largely freed from the pandemic, not only gave people a carefree life, but also heated up private consumption." Now the fourth corona wave is "like a handbrake for the German economy."
Without an official lockdown, there has so far been no government aid.
"At the same time, the shortage of materials is slowing down German industry," said Gitzel.
"The winter months will therefore not be easy for the German economy."
dab / dpa / Reuters
