Private consumption boosts the economy

The German economy is growing, but for how much longer?

Delivery bottlenecks and increasing numbers of corona infections cloud the prospects for the coming months after the recovery in the third quarter.

Wiesbaden - The German economy is entering a difficult autumn and winter with somewhat weaker growth behind it than 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.

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According to the Deutsche Bundesbank, the economic recovery is likely to "take a breather for the time being".

The gross domestic product could stand still in the fourth quarter, wrote the central bank in its current monthly report.

Even before the corona situation worsened, economists had lowered their economic forecasts for the current year due to the delivery bottlenecks.

For example, the “economic wise men” are now expecting gross domestic product to grow by 2.7 percent this year - in March an increase of 3.1 percent was still expected.

For 2022, however, the federal government's advisory body is more confident and expects a strong economic upturn.

dpa