Bundesbank: German economy to contract in the third quarter

The September economic report of the Bundesbank has been published. The report notes that the latest economic data does not offer much hope for the short-term prospects of the German economy, and it is stated that there has been no recovery in the economy during the summer quarter (July-September).

The Bundesbank report states, "Despite a somewhat slowing price increase, strong wage increases, and a good labor market situation, households are still limiting their spending." In addition to this, it is emphasized that the increasing weakness of the industry is also putting pressure on economic growth.

The report states, "The low and continuing decline in incoming orders, as well as decreasing accumulated orders, are increasingly having a pronounced impact on industrial production. A slight contraction in Germany's economic output is expected in the third quarter of 2023."

The report highlights that the German economy is facing problems in foreign trade and emphasizes the dependency of the German industry, which is largely export-oriented, on intermediate goods from China.

It is noted in the report that companies with higher sales are particularly dependent on intermediate goods from China, and it is stated, "Given the increasing geopolitical tensions and related risks, companies and policymakers need to rethink the evolving trade structure."