The Strategist

Bundesbank expects decline in German GDP in Q4 2023

11/21/2023 - 08:28

The Bundesbank predicted in a monthly report that the German economy would continue to contract in the fourth quarter, with a recovery possible in early 2024.

Thom Quine
Thom Quine
The central bank analysts wrote, "The German economy continues to navigate choppy economic waters."

Germany's Federal Statistics Office preliminary estimates show that the country's GDP decreased by 0.1 percent in the third quarter compared to the preceding three months. The final data will be released on November 24.

According to MarketWatch, if the drop lasts for two quarters in a row it may result in an economy-wide recession.

The central bank stated that the nation's industrial base is still weak because of the weak foreign demand and the shock of high energy prices. In the third quarter, the European Central Bank hiked interest rates, which resulted in a decline in private investment. Meanwhile, production fell precipitously in sectors that had previously supported the economy, like automobiles.

At that, the Bundesbank anticipates a gradual improvement in the first part of 2024. Inflation should be reduced and wages raised, among other things, to gradually boost consumer confidence.