German economic outlook brightens as inflation eases – EURACTIV.com

Germany’s economy is expected to recover in the coming months following a persistent recession, according to data released by the National Statistics Office on Monday.

In the third quarter of 2023, the economy shrank by 0.1% compared to the previous quarter. However, experts predict that it will start to recover soon.

„The German economy bottomed out in the summer and things will slowly pick up again starting in the fall,” Timo Vollmershauser, head of economic forecasting at the Ifo Institute, said in a statement.

His comments were based on a survey of businesses carried out by the company, which showed a more positive sentiment than in previous months.

„The outlook is particularly bright for the coming months, but companies are assessing their current situation somewhat better,” Wolmershäuser said.

Meanwhile, inflation, as measured by the European Central Bank’s harmonized index of consumer prices, eased to 3% year-on-year in October, especially as prices such as energy, which have already been hit hard, are expected to continue falling. The war in Ukraine is expected to decrease further. However, so-called core inflation, which strips out volatile energy and food prices, was 4.3% higher in October.

Mainly, the Ifo says wages will grow faster than prices, boosting private consumption as export-oriented industries are able to pass on higher production costs to customers overseas.

However, the German Chamber of Industry and Commerce (DIHK) Martin Wansleben said, „There are no foreseeable signs of a recovery on its own,” and business representatives are more cautious.

“There is a lot of frustration in companies. Companies always have new regulations. Ultimately, these are at the expense of productivity,” Vansleben said.

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„Furthermore, the cost of electricity is almost three times higher than it was in 2020,” he added, urging the government to reduce duties and taxes on electricity.

(Jonathan Bacroff | Euractiv.de)

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