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Surprising growth: Can the German economy turn the tide?
The German economy will grow by a surprising 0.2% in the third quarter of 2024. However, experts warn of a real trend reversal.
Surprising growth: Can the German economy turn the tide?
The surprising figures for the third quarter show it clearly: the German economy has grown contrary to all expectations! Gross domestic product (GDP) rose by 0.2 percent in the period from July to September compared to the previous quarter, according to the Federal Statistical Office's first estimate. While experts and economists expected a decline of 0.1 percent, the result is surprising and raises questions!
The main driver of this unexpected growth is apparently rising spending by private consumers and the state. Consumers who have finally ventured out of their purchasing restraint are bringing a breath of fresh air into the economy, according to Alexander Krüger, chief economist at the Hauck Aufhäuser Lamp bank. But the euphoria could be deceptive - many experts are warning of a possible trend reversal. Jörg Krämer from Commerzbank describes the plus as an “upward outlier”. The leading indicators that have been falling since spring signal a difficult winter half-year! Concerns about the strong auto industry and the ongoing erosion of location quality remain unresolved and could severely slow down further growth.
Stagnation in sight
Uncertainty about the future of the German economy runs like a common thread through all sectors. The auto industry, a key player, is under immense pressure; Volkswagen is not spared and is recording a dramatic drop in profits. The Bundesbank warns: Economic activity could stagnate in the fourth quarter. Although a clear recession is not in sight for the time being, the economy is in a persistent phase of weakness! The federal government is equally pessimistic and forecasts a 0.2 percent decline in GDP for the year as a whole, which would be the second year in a row in which economic output has fallen.
In addition, the increasing number of company bankruptcies is putting a strain on economic stability. While consumption is seen as a beacon of hope, many consumers tend to withdraw their wallets despite rising key interest rates from the European Central Bank, which makes the recovery even more difficult. The fight for solutions within the traffic light coalition is ongoing - unity and clear strategies are sorely needed!