The German economy is entering a difficult autumn and winter with somewhat weaker growth behind it than assumed.

The gross domestic product (GDP) rose in the third quarter by 1.7 percent compared to the previous quarter, as the Federal Statistical Office announced on Thursday.

In a first estimate, the Wiesbaden authority assumed an increase of 1.8 percent.

Compared to the fourth quarter of 2019, i.e. the level before the Corona crisis, economic output was 1.1 percent lower.

Europe's largest economy was boosted by private consumption, which rose strongly by 6.2 percent.

The export of goods and services, however, shrank by 1.0 percent compared to the previous quarter.

Corporate investments in equipment such as machines and vehicles fell by 3.7 percent, while construction investments fell by 2.3 percent.

The industry suffers from supply bottlenecks, raw materials and intermediate products such as semiconductors are scarce and expensive.

Some companies have to throttle production, orders can no longer be processed so quickly.

The mood in the German economy therefore deteriorated further in November.

The Ifo business climate index fell for the fifth month in a row.

"Delivery bottlenecks and the fourth corona wave are causing problems for companies," commented Ifo President Clemens Fuest.

Consumer mood falls

Economists expect the economy to cool down significantly in the coming months, also due to the worsening of the corona infection situation, which is likely to dampen private consumption as an important pillar of the economy.

It is feared that consumers will refrain from going to restaurants or events for fear of infection.

In addition, numerous federal states have started to introduce stricter corona restrictions.

In fact, the fourth corona wave and inflation of more than 4 percent of Germany's consumers are already hitting the mood.

The consumer climate determined by the Nuremberg-based GfK fell significantly in December by 2.6 to minus 1.6 points, as the market research company announced on Thursday.

The propensity to save increases again, the propensity to buy declines.

Last month, the consumer climate had reached its highest level since April 2020, when consumer sentiment rose again after the shock of the first lockdown in the corona pandemic.

Now the fourth wave of rising prices has "melted away" purchasing power, said GfK expert Rolf Bürkl.

That dampens the prospects for the upcoming Christmas business. 

According to the Deutsche Bundesbank, the economic recovery is likely to "take a breather for the time being".

The gross domestic product could stand still in the fourth quarter, wrote the central bank in its current monthly report.

Even before the corona situation worsened, economists had lowered their economic forecasts for the current year due to the delivery bottlenecks.

For example, the “economic wise men” are now expecting gross domestic product to grow by 2.7 percent this year - in March an increase of 3.1 percent was still expected.

For 2022, however, the federal government's advisory body is more confident and expects a strong economic upturn.

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