2023-08-21 14:43:41
The Bundesbank notes that “the German economy is in a weak phase” after stagnating in the second quarter and expects another stagnation in the third quarter.
The Bundesbank says in its August bulletin that “in the second quarter the gross domestic product (GDP) stagnated” at the level of the previous quarter, when it had contracted.
“Weak foreign demand and rising financing costs weigh on the economy,” the Bundesbank economists consider.
However, the cushion of orders in industry and construction, as well as bottlenecks in supplies prevent a weaker evolution of the German economy, which in turn has a wind in favor of the strong labor market.
In addition, private consumption also boosts the German economy in the summer quarter, but it will not prevent it from stagnating.
“Due to stable employment and strong wage increases at a time when inflation rates are falling, the recovery in private consumption could continue,” which will boost the service sector, the Bundesbank economists add.
But weak industrial production is holding the economy back and could weigh on it in the third quarter.
The Bundesbank notes that demand for industrial products remains low.
“Industrial order intake was up in the second quarter a bit from the previous quarter, but this was only due to large orders, which are mainly worked on for a longer period of time,” according to Germany’s central bank.
The Bundesbank expects inflation to fall further in the autumn due to falling energy prices.
The sharp rise in wages in 2023 is a fundamental factor why inflation will exceed 2% for quite some time.
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