The German economy avoided falling into recession thanks to stagnation in the third quarter of this year.
The German Federal Statistical Office (Destatis) has released preliminary gross domestic product (GDP) data for the third quarter of this year. Accordingly, the country's GDP, adjusted for seasonal and calendar effects, recorded 0% growth in the period from July to September this year compared to the previous quarter. Market expectations are that the economy will experience a recession. Thus, after a stagnant third quarter, the German economy did not enter a technical recession, which is defined as “a GDP decline for two consecutive quarters.” After growing 0.3% in the first quarter of the year, the economy contracted 0.2% in the second quarter. Positive contributions to quarterly growth came from investments in equipment such as machinery and facilities. On the other hand, exports decreased, slowing growth. On the other hand, a significant decline in production and a continuation of the recent trend of falling industrial orders have overshadowed growth expectations for the economy in the third quarter. GERMANY IS ENCOUNTERING DIFFICULTIES Annual GDP growth in the third quarter was 0.3%. The German economy remains fragile compared to other countries in the region due to its weak manufacturing sector. High energy costs, weak global orders and high US tariffs negatively affect the economy. China's production of many products previously purchased from Germany and chip shortages that have forced the auto industry to halt production are among the reasons holding back the economy. On the other hand, the German government has promised to lift the country out of economic recession with a sharp increase in spending on infrastructure and defense, but it may take longer than expected for these measures to be reflected in reality. The government revised its official growth expectations, previously announced at 0% for 2025, to 0.2% on October 8. The government predicts the economy will recover to 1.3% growth next year and 1.4% growth in 2027, supported by public spending.
