German economy sees unexpected growth in third quarter

BERLIN– Germany’s economy grew in the third quarter, an unexpectedly positive performance fueled largely by private spending, official figures showed on Friday.

Gross domestic product in Europe’s largest economy rose 0.3% in the July-September period from the previous quarter, the Federal Statistical Office said. This followed a slight increase of 0.1% in the second quarter.

“The German economy has managed to hold its own despite the difficult framework conditions in the global economy, with the continuation of the COVID-19 pandemic, supply chain disruptions, rising prices and the war in Ukraine,” the statistics office said.

The government said earlier this month that GDP would have shrunk in the third quarter and is expected to fall again in the last three months of the year as well as the first three months of 2023 before starting to recover. Two consecutive quarters of negative growth is a technical definition of a recession.

With high energy prices, Germany – like many other countries – is struggling with soaring inflation, which reached 10% in September. On Tuesday, a survey showed German business confidence stuck at its lowest level in more than two years, with energy worries fueling expectations of a tough winter.

Lawmakers last week paved the way for the government to provide up to 200 billion euros ($195 billion) in subsidies to households and businesses until 2024 to ease pressure from high oil prices. energy. However, the details of this plan have not yet been finalized.

Officials say Germany is well positioned to weather the winter with enough energy after Russia cut off natural gas supplies, but stress there will still be a need to conserve the fuel that heats homes, generates electricity and powers factories.

“Looking ahead, the surprise growth in the third quarter doesn’t mean the recession narrative has changed,” ING economist Carsten Brzeski said in a research note. “All leading indicators point to further weakening of the economy in the fourth quarter and there does not appear to be any improvement in sight.”