Germany’s economy seen shrinking again in the current quarter due to falling business confidence

BERLIN (AP) — Germany’s economy is likely to shrink slightly again in the current fourth quarter, the country’s central bank said Monday, while a survey showed business confidence falling unexpectedly.

Europe’s largest economy contracted 0.1% in the third quarter after similar growth in the previous three-month period, according to official data.

The Bundesbank said in its monthly report that “real GDP in Germany is likely to decline slightly again in the fourth quarter of 2023” as a result of weak performance in industry and construction.

Contraction in two consecutive quarters is a common definition of a recession, although economists on the panel declaring a recession in the eurozone use a broader set of data, including employment figures.

is germany major economies only According to the International Monetary Fund, a contraction is expected this year, with a decline of 0.5% expected. german government A decline of 0.4% is estimated.

The economy has been weighed down by higher energy prices, global economic weakness and interest rate hikes to fight inflation. have recently become involved in those problems domestic budget crisis which forced the government to take this step a package of measures To subsidy cut and some spending to comply with tight restrictions imposed by Germany on debt raising.

Germany has also been struggling with other issues Such as an aging population, slow use of digital technology in business and government, excessive red tape that hinders business launches and public works projects, and lack of skilled workers,

Also on Monday, the Ifo Institute said its closely watched business confidence survey fell from 87.2 points in November to 86.4 points this month. This defied economists’ expectations of a modest growth of 87.7%.

Managers’ view of both their current situation and the outlook for the next six months became bleak. The survey is based on monthly responses from approximately 9,000 businesses across various sectors.

“The fiscal problems of the past month have clearly left their mark on the German economy, with the country’s weakest leading indicator showing how difficult it will be for the economy to bounce back,” said ING economist Carsten Brzeski.

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