Germany’s economy grew less than anticipated in the third quarter of 2024, further dampening the outlook for the country, which is on track to be the worst-performing economy among the Group of Seven (G7) rich democracies this year.
According to the country’s statistics office, Gross Domestic Product (GDP) grew by just 0.1% in the third quarter compared to the previous quarter, down from an initial estimate of 0.2% growth. “The German economy barely moved forward in the third quarter, continuing the trend of virtually no growth in the eurozone’s largest economy,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
Germany has lagged behind the European Union average since 2021 and is expected to experience a contraction for the second consecutive year in 2024.
A recession is typically defined as two consecutive quarters of economic contraction, and the second quarter’s data, showing a 0.3% decline, had already raised fears of a recession. “Even if the German economy avoided a summer recession, a winter recession is looming,” said Carsten Brzeski, global head of macro at ING.
On the spending side, household consumption rose by 0.3% quarter-on-quarter, while government spending increased by 0.4%. However, investment in machinery and equipment fell by 0.2%, and construction investment declined by 0.3%.
Looking forward, Vistesen noted that there is potential for continued growth in consumer spending, driven by solid real income growth and a high savings rate.
Exports also weakened in the third quarter, with goods and services exports dropping by 1.9% compared to the second quarter, particularly impacted by a 2.4% fall in goods exports.
