2023.11.2410:41:00UTC+00German Economy Shrinks 0.1% As Estimated

Germany's economy contracted slightly, as initially estimated, in the third quarter with the household consumption that used to be the pillar of growth, acting as a drag.

Confirming the initial figures, detailed data from the statistical office Destatis showed on Friday that gross domestic product shrank 0.1 percent quarterly.

Economic performance was virtually stagnant in the first two quarters of the year with flat growth in the first quarter and a 0.1 percent rise in the second quarter.

Household spending dropped 0.3 percent after a 0.2 percent rebound in the preceding period. Meanwhile, government spending grew for the first time in more than a year, up 0.2 percent.

Positive contributions came from gross fixed capital formation. Investment in machinery and equipment rose 1.1 percent and that in construction gained 0.4 percent.

Exports of goods and services decreased 0.8 percent. At the same time, imports declined more markedly by 1.3 percent. The net exports rose 0.9 percent.

The calendar-adjusted GDP contracted 0.4 percent annually after rising 0.1 percent in the second quarter. This measure was initially estimated to have fallen 0.3 percent.

The annual decrease in price-adjusted GDP doubled to 0.8 percent from 0.4 percent.

"Today's data will do very little to end the debate on whether or not the German economy is again the sick man of Europe," ING economist Carsten Brzeski said.

"In any case, the German economy has become one of the growth laggards of the eurozone."

The Bundesbank forecast the German economy to shrink again in the fourth quarter before undergoing a slight increase in economic output in the first quarter of 2024.

The European Commission had projected Germany to shrink 0.3 percent in 2023, before rebounding 0.8 percent next year and 1.2 percent in 2025.