The German economy surprisingly grew by 0.3 percent in the third quarter, as the Federal Statistical Office announced on Friday in a first flash estimate.

The economy is "continuing to hold its own despite difficult global economic conditions with the ongoing corona pandemic, disrupted supply chains, rising prices and the war in Ukraine," the statisticians said.

Svea Junge

Editor in Business.

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The high energy prices are a particular burden for energy-intensive industrial companies.

The high inflation of 10 percent recently means that many consumers are holding their money together and tightening their belts.

Service providers and retailers are feeling the effects.

As a pillar of the economy, consumption is increasingly falling away.

"Despite the surprisingly strong result for the third quarter, a recession in Germany cannot be stopped for the winter half-year," commented Ulrich Kater, chief economist at Dekabank.

Jörg Krämer, chief economist at Commerzbank, attributes the unexpected plus to private consumption.

"But that might just be the calm before the storm.

Because the high inflation is causing the purchasing power of consumers to collapse,” he warns.

Everything points to a contraction in economic output in the winter months.

In the first quarter of the year, gross domestic product (GDP) grew by 0.8 percent compared to the previous quarter.

In the second quarter, it was only enough for mini growth of 0.1 percent due to the consequences of the Russian war of aggression in Ukraine.

France, the second largest economy in the euro area, also grew despite the energy crisis.

GDP rose by 0.2 percent in the third quarter compared to the previous quarter, according to the national statistics office Insee on Friday.

In Spain, growth weakened significantly compared to the previous quarter, but was still able to increase.

According to the Spanish statistical office INE, the increase was also 0.2 percent.

Recession expected in the winter half-year

In its current monthly report for October, the Bundesbank had expected the German economy to stagnate in the summer quarter.

The prospects are bleak: "In the winter half-year that has just begun, the downward forces are likely to increase significantly," explained the Bundesbank economists.

Overall, economic output could drop significantly in the winter months.

"The economy is likely to be on the verge of a recession," according to central bankers.

Economists are assuming that German economic output should grow in 2022 as a whole, supported by the growth in the first half of the year.

The federal government is forecasting growth of 1.4 percent compared to the previous year.

In the coming year, however, the economy is likely to shrink.

The federal government expects a minus of 0.3 percent, the OECD even with a decline of 0.7 percent in economic output.

The crisis has hit the German economy much harder than other European countries.

mood of the companies in the basement

This is also shown by current sentiment indicators.

While the purchasing managers' index from S&P Global (formerly Markit) for the German economy fell by 1.6 points to 44.1 points in October - and was thus well below the growth threshold of 50 points - the barometer for the euro area as a whole was still there 47.1 points.

The results showed that the German economy's slide accelerated early in the fourth quarter of 2022, said S&P economist Phil Smith.

The signs of an impending recession in the largest economy in the euro area had increased.

On the other hand, the business climate index of the Munich Ifo Institute stabilized in October and fell by only 0.1 points to 84.3 points.

However, this breather, which economists attribute to the recent fall in gas prices and the government's announced energy cuts, is unlikely to mark a turnaround.

"Apparently the 200 billion 'boom' from the federal government has stabilized the business expectations of companies," said KfW chief economist Fritzi Köhler-Geib.

The next few months are likely to be challenging, however.

The German economy is facing "a difficult winter," said Ifo President Clemens Fuest.

Alexander Krüger, chief economist at the private bank Hauck Aufhäuser Lampe, also paints a bleak picture: "Companies remain in depression mode, the energy crisis is stifling economic life," he commented.

With more and more consumers running for cover, the only question is how long and deep the recession will be.

Jörg Krämer, chief economist at Commerzbank, also does not want to give the all-clear.

The trend is clearly down.

"In addition, the business climate is still at levels at which the German economy had shrunk in the past," explained Krämer.